Business hire purchase
Hire purchase lets your business pay for a van, machine or equipment over time. Then it is yours at the end.
- We are a broker, not a lender.
- We have a panel of over 120 lenders.
- There is no fee to apply.
- Our FCA number is 1058283. We are members of the NACFB.
Get the free list to check before you sign
Written by Martin Mackenzie, Sales Director. Checked .
Read the film's words
Hire purchase. In this video we are going to discuss hire purchase. It lets a business buy an asset over time. The lender owns it until it is all paid. Then a small fee makes it yours. It is often called HP. Most of the finance we arrange is hire purchase. Your business puts down a deposit. Most lenders look for 5 to 10%. No deposit at all is quite common too. The lender pays the seller. Your business starts using it straight away. Then your business pays the lender each month. The amounts are set at the start. Each lender sets its own costs. So we cannot give a price online. And if paying stops, the lender can take the asset back. Most run for 2 to 5 years. We arrange 12 months to 7 years. VAT can be paid at the start, with the deposit. Or some lenders pay the VAT for now. You claim the VAT back on your VAT return. The lender takes it back a few months later. Some have a balloon. That is a bigger sum at the end. On business hire purchase, the balloon must be paid. You cannot hand the asset back instead. Hire purchase or finance lease? It comes down to who owns it at the end. On hire purchase, a small fee at the end makes it yours. On a finance lease, the lender owns it all the time. One. Apply online with Donnie, our in house AI agent, or call us. Applying is not a credit search. Two. A person in our team reads your application. Three. If you go ahead, you sign a consent form. Then we run a light credit check on the company. It is often known as a soft search. We send your case to the lenders that suit it. Each one does its own credit check. Four. We tell you what the lenders say. If one says yes, we send a quote. Then you sign. Five. The lender pays the seller, and you collect the asset. Lenders often want to see three months of business bank statements. Our page has a free list to check before you sign. Apply online with Donnie, our in house AI agent, 24/7. Or call our team on 01463 652 653. Thanks for watching!
What is hire purchase?
It is often called HP. Most of the finance agreements we arrange are hire purchase.
What can a business buy on hire purchase?
- vans, pickups, cars, trucks and trailers
- diggers, tractors, plant and farm machines
- machines and equipment for a workshop, kitchen or factory
New or used. From a dealer, another business, a private seller or an auction. The seller must show it is theirs.
How does business hire purchase work?
- Your business pays a deposit. Most lenders look for 5 to 10%. No deposit at all is possible, and quite common.
- The lender pays the seller for the asset. Your business starts using it straight away.
- Your business pays the lender each month. On most agreements, the payments are fixed at the start. Fewer lenders offer a variable rate, where they can go up or down.
- After the last payment, your business pays a small fee, called the option to purchase fee. Then the asset is yours.
Most agreements last 2 to 5 years. We arrange them from 12 months up to 7 years.
How does VAT work on hire purchase?
On hire purchase, you can pay the VAT at the start, with the deposit. Or some lenders pay it for now. You claim it back on your VAT return, and the lender takes it back a few months later.
To pay VAT a bit each month instead, that is a finance lease, a different agreement.
What does hire purchase cost?
Each lender sets its own rate and fees, so we cannot give a price online. Here is a real agreement, with every fee shown.
A real example of a hire purchase agreement completed by Mackenzie Commercial Finance
Completed by Martin Mackenzie, September 2026.
These are real figures from a real agreement we completed for a customer. The customer was a limited company buying a used asset from a dealer.
- Price
- £43,998 including VAT
- Deposit
- £8,799.60 (20%)
- How many months
- 60
- Monthly payment
- £714.38
- Documentation fee
- £280
- Option to purchase fee
- £80 + VAT
- Total cost of finance
- £8,024.40
- Total amount paid
- £52,022.40 (+ VAT on the £80 fee)
This was business finance for a company. It was not regulated consumer finance. Every case is different. This is not a quote.
What is a balloon payment on hire purchase?
A balloon is a bigger last payment. It makes each monthly payment lower. In our experience, balloons are used more on high-end vehicles.
On business hire purchase, the balloon must be paid. It is not a choice to hand the asset back. You can pay it, refinance it if a lender will, or sell the asset to clear it.
The lender may add conditions, like a mileage cap, so the asset is worth what they expect. And the balance comes down more slowly. So you pay more interest in total.
Hire purchase or finance lease?
With hire purchase, your business owns the asset at the end. With a finance lease, the lender does.
| Hire purchase | Finance lease | |
|---|---|---|
| What it is for | Buying an asset to keep | Using an asset without owning it |
| Who owns it | The lender, until the last payment | The lender, all the time |
| At the end | A small fee, then it is yours | You can keep using it, usually for a small yearly rental |
| VAT | Pay it at the start, or the lender pays it for now | A bit each month, with each payment |
Which one suits your accounts and tax is a question for your accountant. All the types are on our asset finance page.
How do we arrange hire purchase for you?
A broker finds the lender for you. Here is what happens, step by step.
- Apply online with Donnie, our in house AI agent, or call us. Applying is not a credit search.
- A person in our team reads your application. We get back to you within a day.
- If you want to go ahead, you sign a consent form. Then we run a light credit check on the company, often known as a soft search. We choose the lenders that suit your case, and send each one a full written case, called a proposal. Each lender then does its own credit check.
- We tell you what the lenders say. If finance is approved, we send you a quote with the figures. Then we take you through signing the finance documents.
- The lender pays the seller, and you collect the asset.
If one lender says no, do not take it as the last word. Another lender may see your case in a different way.
Who can get hire purchase, and how much?
We arrange hire purchase for limited companies and LLPs (limited liability partnerships) from £15,000. For sole traders and partnerships, it is over £25,000.
For less than that, please speak to us before you apply. For sole traders and partnerships, we only arrange that in person, at our office, in the IV postcode area.
We set no top limit of our own. Lenders set different limits, and a few have no hard limit. With a panel of over 120 lenders, we can spread a big need across several.
Will I need to give a personal guarantee?
If you own a limited company, expect to be asked. A personal guarantee is a promise to pay if the company cannot. The lowest-cost lenders often want one. Another lender may not, but may cost more. We tell you before you sign.
Can I end or pay off hire purchase early?
Yes, you can end it early by paying it off. The charges are set at the start. To settle early, the lender adds up what is left, and most take some off. If you may pay early, tell us first, so we can set a shorter term.
What should I check before I sign?
Before you sign, check the total you will pay, every fee and any balloon. Check how paying early works, and any personal guarantee. This free list helps. Tick it off, then print it or save it as a PDF. Nothing you tick here is sent to us.
How do you get paid, and what does the finance cost?
The lender pays us a commission, only once your finance is in place. There is no fee to apply, and no fee up front. Apply by phone, by email, or online with Donnie, our in house AI agent, in under 5 minutes.
If you stop before your finance is in place, you owe us nothing, unless you agreed the rare inspection fee. The lender pays our commission to our principal, the firm we work under. It is already inside any figures we give you.
Most lenders pay a share of the amount borrowed. It is up to 10% of what you borrow, and often less. It depends on the lender. You see it before you sign. Lenders pay different amounts, so the one we find may not pay us the most, or the least. A dealer who arranges finance is a broker too.
Lenders' own fees vary. As a guide, a fee to set up the agreement is about £100 to £500. It is often paid with the first payment. Some charge about £30 to £50 a year. On hire purchase, about £100 to £300 to own the asset at the end.
Do you arrange hire purchase across Scotland and the UK?
Yes. Our office is in Scotland. From there we help businesses all over Scotland and the UK.
A lot of our lenders let you sign online. So where you are does not matter.
★★★★★
Excellent service as ever from Martin at Mackenzie Commercial Finance who looks after various parts of our financing for us.
Hire purchase questions
What does hire purchase mean?
Your business hires the asset from the lender while it pays for it. After the last payment, and a small fee, your business buys it. That is the "purchase".
Is hire purchase a good idea for a business?
It can be. Your business gets the asset now and keeps its cash. On most agreements, the payments are fixed at the start. Fewer lenders offer a variable rate, where they can go up or down. But you pay interest, and the asset is the lender's until the end. If payments stop, the lender can take it back.
How do I work out the cost of hire purchase?
Add up every payment and every fee, then take away the amount borrowed. What is left is the cost of finance. Our real example shows each figure.
Is business hire purchase the same as PCP?
No. PCP, or personal contract purchase, is personal car finance, with several choices at the end. On business hire purchase, any balloon must be paid. It is not one of several choices.
Can a sole trader get hire purchase?
Yes, for over £25,000. For £25,000 or less, please speak to us first. For sole traders and partnerships, we only arrange that in person, at our office, in the IV postcode area.
Does applying mean a credit check?
Applying to us is not a credit search, and it does not touch your credit score. A person in our team reads it first. To go ahead, you sign our consent form. Then we run a light credit check on the company, often known as a soft search. Each lender then does its own check.
Is hire purchase tax deductible?
Hire purchase may allow capital allowances, a kind of tax relief. We are not tax advisers, so ask your accountant. They can tell you how it works in your accounts.
How do I apply for hire purchase?
Apply online with Donnie, our in house AI agent, at any time, or call us. Donnie can also ask our team to call you back. We will tell you straight what is possible, and what happens next.
Use an AI assistant? It can ask Donnie questions for you. It finds him at /llms.txt and /api/agent.
Can I apply at any time, from anywhere in the UK?
Yes. Donnie, our in house AI agent, takes applications 24 hours a day, 7 days a week. He answers your questions too. Our office is in Scotland, and our team works with businesses across the whole UK.
Donnie is powered by Anthropic's Claude. He is built so other AI agents can talk to him. So your own AI assistant can ask him questions for you. How AI assistants talk to Donnie