Choosing Between Hire Purchase and Finance Lease

Hire Purchase vs. Finance Lease

Is your business contemplating acquiring new or used equipment? The financing method you choose can shape your financial strategy. Two common finance options are Hire Purchase and Finance Lease, each offering advantages.

Hire Purchase: Owning Your Assets

Hire Purchase operates on the premise of hiring the equipment with the plan to own it over time. The machine would be hired over a contract period. Once the product is paid for in full the ownership will be signed over.


Costs Spread Over Time:

Instead of facing a hefty upfront sum, Hire Purchase allows businesses to distribute the expense over a more manageable 3 to 5-year period. This means you can ensure financial planning. Easing the burden of acquiring larger, more expensive assets.

Affordability Boost:

Larger assets become more accessible. Businesses can tailor payment terms to suit their financial situation. Including choosing a fixed term and deposit.


One of the most significant advantages is the eventual ownership of the asset. After completing the last instalment and an option-to-purchase fee, the business becomes the legal owner.

Tax Advantages:

Generally, Hire Purchase agreements come with tax advantages. Making it an appealing option for businesses looking to optimise their financial position.


Asset Depreciation:

Businesses must be mindful of potential depreciation. Ensuring the asset’s value aligns with expectations.

Credit Implications:

Non-payment may have repercussions on the business’s credit rating. Possibly leading to asset repossession.

Finance Lease: Flexibility and Planning

A Finance Lease is an agreement where the finance company retains legal ownership throughout the lease. Here’s what businesses need to know:



Businesses can tailor the agreement’s length. Also tailoring rental repayment profiles, and end-of-lease options to suit their specific needs.

Cash Retention:

Instead of an outright purchase, a Finance Lease enables businesses to retain cash within the company.

Financial Planning:

With a predictable repayment profile, businesses can effectively plan for the asset’s lifetime.

Tax Advantages:

Finance Leases can offer tax benefits, enhancing the financial appeal of this option.


Security Against Assets:

The agreement is secured against the leased asset. Ensuring the finance company’s interest is protected.

Credit Implications:

As with any financial agreement, non-payment could impact the business’s credit rating.


Unlike Hire Purchase, businesses won’t own the asset at the end of the lease. Offering a different perspective on long-term commitment.

Choosing The Correct Options For Your Business

Both financing options have their merits. The choice between Hire Purchase and Finance Lease is dependent on the business’s circumstances and financial goals. Contact us today!

Contact Us

If you’d like to speak to one of the experts at E H Hassell and Sons, get in touch. Call us on 01782 644299 or email us at