When choosing to take out finance there are many different choices to consider.

A finance lease and hire purchase are both options for financing assets over a fixed period.

Both of these options vary in many ways, such as ownership of the asset, depreciation, rental payments and the tax impact.

What is a lease?

A finance lease is where the finance company purchase the asset and they ‘lease’ it to you for a fixed period at a fixed monthly rental.

As the customer you should pay the agreed initial rental followed by fixed monthly rentals for a period of time.

What are the key features of a finance lease?

  • Conserves cash flow by paying in instalments.
  • Low upfront costs as the VAT is spread across the life of the agreement.
  • Fixed monthly repayments.
  • Monthly rentals can normally be offset against taxable profits.
  • At the end of the lease you can continue to rent the asset by paying an annual rental.
  • Or use the ‘passing title process’ and sell the goods to a third party and retain up to 99% of the sale proceeds.

What is a hire purchase?

With a hire purchase you will pay the agreed deposit, VAT on the full purchase price and then finance the balance over a suitable period with fixed monthly payments.

A balloon or final lump sum can be applied to the back end of the agreement to reduce the monthly repayment.

What are the key features of a hire purchase?

  • Conserves cash flow by paying in instalments.
  • Businesses can offset interest payments against taxable profits.
  • Moorgate Finance can tailor the agreement to suit business requirements.
  • Fixed monthly payments.
  • Outright ownership at the end of the agreement.

Moorgate Finance offer both of these hire purchase and lease options, so you can choose the right choice for you.