Hire purchase - Own your business assets over time
Hire purchase lets your business spread the cost of vehicles, equipment, or machinery over time—owning them outright at the end without large upfront costs.
Compare lenders, check eligibility, and apply quickly with Funding Options by Tide – supporting 17,000+ SMEs and over £1bn funded.
Last updated: October 2025, edited by Joe Morley, reviewed by Vivek Seda
What is hire purchase and how it works
Key takeaways
HP gives you a clear path to own the asset with fixed repayments.
Typical term: 24–72 months (case-dependent)
Upfront: deposit usually required; VAT typically due upfront on the asset price (confirm with your accountant)
Assets: vehicles (cars, vans, HGVs), plant, machinery, IT, fit-out and more
Compare with: finance lease (/knowledge/finance-leases/) and operating lease (/knowledge/operating-leases/)
What is hire purchase?
Hire purchase (HP) is an asset finance agreement that lets your business buy assets through fixed monthly payments over an agreed term. You gain ownership once the final payment is made.
It’s ideal for companies wanting to own vehicles, equipment or machinery without paying the full amount upfront. Learn more about asset finance or compare with a finance lease.
How does hire purchase work?
Choose the vehicle or equipment you need.
The lender purchases it on your behalf.
You make fixed monthly repayments plus interest.
Once the final payment is made, ownership transfers to your business.
This provides stability for cash flow while building ownership equity.
Benefits of hire purchase
Things to consider
Benefits | Considerations |
Own the asset at the end of term | You take on maintenance and resale responsibility |
Spread cost over time | Early settlement fees may apply |
Fixed monthly payments aid budgeting | May need a deposit or initial payment |
Claim capital allowances and VAT (where eligible) | The asset is security for the loan |
Improves access to equipment you need now | Not suitable for short-term use assets |
Hire purchase vs finance lease vs operating lease
Product | Best for | Ownership | Upfront & VAT | Usage limits | End-of-term |
Hire purchase (HP) | Owning the asset | Yes (after final payment) | Deposit; VAT often upfront on asset price | None | You own it |
Long-term use + flexibility | No (title stays with lessor) | Lower upfront; VAT commonly on rentals | Typically none | Extend/upgrade or sell on lessor’s behalf (rebate rules) | |
Operating lease / contract hire | Lowest monthly + refresh often | No | Initial rental; VAT on rentals | Yes (mileage/return) | Return/upgrade; maintenance often included |
Tax & accounting: treatment varies by product and your circumstances — please seek professional advice.
Who uses hire purchase?
Construction & trades
Plant, tools, access equipment
Manufacturing & food
Production lines, packaging, ovens
Healthcare & fitness
Medical devices, gym kit
Technology & office
IT, servers, printers, office fit-out
Also see business vehicle finance
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Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Total interest
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Financial product information
Representative example*
• 9.7% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,291.56. The total amount payable is £54,997.44
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 8.2% APR
Repayment period
1 month to 30 years terms
Alternatives to hire purchase
More options
If you need equipment finance, hire purchase isn't your only option.
Finance lease
You might also look into a finance lease, which is a similar long-term commitment but you won't own the item at the end of term.
Operating lease
On the other hand, for more flexibility, operating leases are a popular choice, because you can often get regular upgrades and maintenance included.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
Joe Morley
Business Finance Lead
Joe has been helping UK businesses secure the funding they need since 2015. Over the years, he’s supported hundreds of SMEs in accessing millions of pounds for everything from purchasing essential assets to unlocking working capital for day-to-day operations. As Head of Sales at Funding Options, Joe leads a large team of expert Business Finance Specialists dedicated to finding the right solution for every customer. His goal is simple - to make securing finance straightforward, stress free, and tailored to each business’s needs.