Hire purchase
Pay in instalments over an agreed term. Title transfers when you exercise the purchase option. Fixed-cost agreements. VAT is paid with the deposit and with each payment; interest may be tax deductible.
- Range
- By asset value
- Term
- Typically 2–7 years
- Family
- asset
- Search
- Full market, one file
At a glance
- Title at end of term
- Fixed repayments
- New or used assets
- VAT on payments
How it works
- 1You choose the asset (new or used). The funder pays the supplier.
- 2You pay a deposit and then fixed instalments over an agreed term (typically 2–7 years).
- 3VAT is paid with the deposit and with each payment; interest may be offset against profits.
- 4You can usually claim capital allowances because you are treated as owner for tax purposes.
- 5At the end of the term you exercise the purchase option and take title.
Who it’s for
- Businesses acquiring vehicles, plant, machinery or equipment
- Owners who want the asset on the balance sheet at the end
- Companies that want to reclaim VAT on the capital cost (subject to current rules)
Good to know
Repayments can be shaped around seasonality.
Fixed-cost agreements make budgeting straightforward.
One application with QED searches the full market. That saves you running the same file around several lenders, and it avoids multiple credit searches on the business and directors. A hard search is only placed when you proceed with a chosen lender.
Hire purchase vs finance lease vs sale & leaseback
Tax treatment depends on the agreement and current HMRC rules — confirm with your accountant. Comparison drawn from qedfinance.com/assetfinance.
What it is
Hire purchase
Buy the asset in instalments. Title transfers when you exercise the option.
Finance lease
Use the asset without buying it. Funder owns it; you pay rentals.
Sale & leaseback
Funder buys kit you already own and finances it back on HP or lease.
End of term
Hire purchase
Purchase option — you take title
Finance lease
Secondary rental, sell and keep a share of proceeds, or return
Sale & leaseback
Same options as the HP or lease you took back on
VAT (typical)
Hire purchase
Paid with the deposit and with each instalment; reclaim on the capital cost (current rules)
Finance lease
Claimed on the rentals
Sale & leaseback
Follows HP or lease treatment
Tax (typical)
Hire purchase
You are treated as owner — capital allowances often available. Interest may offset profits.
Finance lease
Rentals usually offset against pre-tax profits. No title in the HP sense.
Sale & leaseback
Ask your accountant — it is a sale then a hire/lease back.
Best when
Hire purchase
You want to own the asset and claim allowances
Finance lease
You want use without ownership and a lower initial outlay
Sale & leaseback
You need cash from unencumbered plant, vehicles or machinery
Documents QED will ask for
Same list as the attach-files section on the website application. Tick what you have when you apply; email the rest.
- Last published accounts (full accounts, not abbreviated)
- Latest management accounts if year-end is stale
- Last 3 months’ business bank statements
- Supplier quote, invoice or pro-forma for the asset
- Proof of ownership / V5 / serial numbers (sale & leaseback or refinance)
- Settlement figure if the asset is already on finance
FAQ
Drawn from qedfinance.com and the way the UK market actually underwrites these facilities.
Do I own the asset during the term?
Title sits with the funder until the option is exercised. For tax you are typically treated as the owner, which is why capital allowances are often available.
What deposit is needed?
It varies by asset, age and credit. Some deals can be done with a low or even nil deposit; others want 10%+.
What is the difference between leasing and hire purchase?
Ownership. On hire purchase you are treated as owner for tax purposes and title transfers when you exercise the option. On a finance lease the funder keeps title; you pay for use. (British Business Bank guidance, and the QED asset-finance page.)
Can repayments follow a seasonal business?
Yes. Many funders will shape the profile around cash flow rather than a flat monthly amount — that is one of the reasons to search a panel rather than take the first offer.
New and used?
Both. Age, residual value and the supplier all affect rate and term. Typical HP terms run 2–7 years.
Does a low credit score rule me out?
It can limit options with some houses. One application with QED searches the market and avoids multiple hard searches on the business and directors.
New or used assets?
Both. Hire purchase, leasing, sale & leaseback and refinance can all be arranged against new or used plant, machinery and vehicles, subject to age and residual value.
Can repayments follow seasonality?
Yes. Many funders will structure rentals around seasonal cash flow rather than a flat monthly profile.
Prefer a number first?
Model an illustrative structure, email yourself a copy, then apply if it looks right.
Open the calculatorQED is a broker, not a lender. A low credit score can limit options with some houses; a search with us does not place a hard search on the business or directors until you proceed with a chosen lender.