Hire Purchase is one of the most preferred types of car finance rental agreement for small businesses since this lease plan allows you to use the car while you make the payments.
People who opt for such a financial product should note that they are only given the title of ownership of the vehicle once the final payment is made and all the terms of the agreement are met.
This means that, until the buyer makes the final payment, he does not get ownership of the car, he can use the car but the purchase deed will remain with the lender. The buyer is allowed to claim the vehicle’s depreciation and interest paid against his business income for tax purposes.
In this type of agreement, the buyer has the option of including an upfront deposit. The buyer can alternately trade in another vehicle to reduce his total rental commitment.
A balloon payment can also be set for the end of the term, and the buyer can choose to structure the rentals in order to make it easier for him to pay off the debt over the term of the agreement.
If you choose to opt for a hire purchase agreement with a balloon payment, then you should remember that the balloon payment will have to be cleared for you to be the official owner of the purchased vehicle.
Vehicle hire purchase agreements are ideal for people who want to lease a car use it and then own it finally.