Hire Purchase Scheme can be regarded as a financing arrangement whose principal
purpose is to finance the use of equipment for the major part of its useful
life.
With a hire purchase agreement, after all the payments
have been made, the business customer becomes the owner of the equipment.
This ownership transfer either automatically or on payment of an option
to purchase fee.
For tax purposes, from the beginning of the agreement
the business customer is treated as the owner of the equipment and so
can claim capital allowances. Capital allowances can be a significant
tax incentive for businesses to invest in new plant and machinery or to
upgrade information systems.
Under a hire purchase agreement, the business
customer is normally responsible for maintenance of the equipment.
For your payment plan computation, please use our online calculator.
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