Hire Purchase for Vehicles, Plant & Equipment
Hire purchase (HP) is the most popular way for UK businesses to buy vehicles and equipment. You pay a deposit, spread the rest over fixed monthly payments, and once the final payment and any small option fee are made, the asset is yours. Your cash stays in the business, the asset starts earning straight away, and you know exactly what you’re paying each month.
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How business hire purchase works
1. Pay a deposit
Usually around 10% of the price, plus VAT. Some lenders will consider less, and VAT deferral can spread the VAT over the first few months.
2. Fixed monthly payments
Spread the balance over 1 to 5 years, with payments fixed for the whole term so budgeting is simple.
3. You own it
Once the final payment and any option fee are paid, the asset belongs to your business outright.
Ways to shape your HP agreement
Balloon payment
Defer part of the cost to a final payment to lower the monthly instalments. Useful where an asset holds its value well.
Seasonal payments
Match payments to your trading year, with lower payments in quieter months. Popular in farming, construction and hospitality.
VAT deferral
Some lenders let you pay the VAT a few months into the agreement, after you’ve reclaimed it, easing the upfront cost.
Case study
£543k of Volvo FH 500s on hire purchase
Buxton haulier SK Distribution has funded four brand-new Volvo FH 500 tractor units through Boost across three deals, worth £543,475 plus VAT.
- Hire purchase over 60 months on every truck
- 10% deposits with a three-month VAT deferral
- Tier 1 rates on every deal
Deposits and rates were specific to this customer and aren’t guaranteed for other applications.
What you can buy on hire purchase
Commercial vehicles
Vans, pickups, Lutons and specialist vehicles, new or used.
Commercial vehicle finance →
HGVs & trucks
Tractor units, rigids, tippers and trailers for hauliers and operators.
HGV & truck finance →
Plant & machinery
Diggers, dumpers, telehandlers, cranes and production machinery.
Construction finance →
Hire purchase vs finance lease
Both spread the cost of a vehicle or machine over monthly payments. The main differences are ownership and VAT.
| Hire purchase | Finance lease | |
|---|---|---|
| Who owns it? | You, once the final payment and any option fee are paid | The lender. You use it for the term but don’t take ownership |
| VAT | Usually paid upfront on the purchase price, then reclaimed if you’re VAT-registered. VAT deferral is sometimes available | Added to each monthly rental, so there’s no large VAT bill at the start |
| Upfront cost | A deposit, often around 10%, plus VAT | Typically one or a few rentals in advance |
| On your balance sheet | Yes, as an asset you’re buying | Usually, under current accounting rules. Check with your accountant |
| End of the term | The asset is yours | Extend at a low rental, or sell the asset to a third party and usually receive most of the proceeds |
| Balloon option | Yes, to lower monthly payments | Yes, a final rental can be structured in |
This is a general guide. Your accountant can confirm the tax and accounting treatment for your business.
Things to consider
A fixed commitment
You must keep up the payments for the full term. The asset can be repossessed if you don’t.
Higher monthly cost than leasing
Because you’re paying off the full value to own it, monthly payments can be higher than a lease on the same asset.
Blog
Case Studies & Guides
Explore our latest case studies and finance guides.
Hire Purchase FAQs
What is business hire purchase?
Hire purchase lets your business buy an asset over time. You pay a deposit and fixed monthly payments, and ownership passes to you once the final payment and any option fee are paid.
How much deposit do I need for hire purchase?
Often around 10%, plus the VAT on the purchase price. Some lenders will consider lower deposits for strong applications, and VAT deferral can help with the upfront cost.
Can I reclaim the VAT on a hire purchase agreement?
If your business is VAT-registered, you can usually reclaim the VAT on commercial vehicles and equipment bought on HP in your next VAT return. Cars have different rules, so check with your accountant.
Can I get hire purchase on used vehicles and equipment?
Yes. Most lenders fund used assets from dealers, and some fund private and auction purchases. The age of the asset at the end of the agreement affects which lenders we use.
How long can a hire purchase agreement run?
Usually 1 to 5 years, and longer for some new HGVs and high-value machinery. Longer terms lower the monthly payment but increase the total cost.
Can I settle my hire purchase early?
Yes. Most agreements can be settled early. The lender will give you a settlement figure, which may include an early settlement charge.
Is hire purchase or a finance lease better?
Hire purchase suits businesses that want to own the asset and can reclaim VAT. A finance lease suits businesses that prefer lower upfront costs and VAT spread across the rentals. We’ll set out both for you.
Are you a lender?
No. Boost Finance is a credit broker, not a lender. Boost Asset Finance Ltd is an Appointed Representative of EFT Finance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 667290). We work with a panel of lenders to find the right finance for you.
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