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Leasing & Hire Purchase Checklist

Leasing or Hire Purchase helps businesses acquire the use or ownership of assets like vehicles, plant and machinery and IT equipment without putting a strain on working capital or other credit lines.

This checklist could help you avoid common mistakes and help you decide whether Leasing or Hire Purchase suits your business before you apply.

warehouse stock

PLEASE NOTE

This checklist is not part of an application process for Leasing or Hire Purchase However, we hope it gives you an idea of what is involved and what you need to do to prepare for Leasing or Hire Purchase. Some providers may ask for more or less information about your business and the finance you need than what is set out below. This will change depending on the circumstances, the assets and the lender involved.

STAGE 1: Leasing or Hire Purchase?

  • Does leasing an asset suit your business?
    What do you want to do with the asset at the end of the rental agreement? Do you want to continue to rent it, return it or replace it?

  • Does a Hire Purchase agreement suit your business?
    Do you want to own the asset at the end of the contract?

STAGE 2: Are you a suitable candidate for Leasing or Hire Purchase?

  • Can you prove your ability to finance repayments?
    Your business doesn’t need to be profitable, but you need to display your ability to make your rental payments.

  • What does your Credit Report look like?
    Leasing and Hire Purchase providers will look at your business’ credit report. A poor credit rating won’t necessarily result in rejection, but you may get less favourable terms.

STAGE 3: Understanding the agreement

  • Do you know what the agreement involves?
    Do you need to pay a deposit at the start of the agreement? Do you need to provide other security? Can you reduce monthly repayments by paying more upfront or extending the term, depending on the type of asset?

  • Do you understand the payments involved?
    Are payments fixed? Is there a minimum term to the rental agreement? Are there any fees involved at the end of the contract or for paying off early?

STAGE 4: What happens when the agreement or contract ends?

  • At the end of a Leasing agreement?
    Do you have an option to continue renting the equipment at the end of the minimum or primary term? Will you want to return it? Or will you look to replace it?

  • At the end of a Hire Purchase agreement?
    Is there a fee payable to secure title to the asset?

What's your next step?

Disclaimer: We make reasonable efforts to keep the content of this article up to date, but we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. This article is intended for general information purposes only and does not constitute advice of any kind, including legal, financial, tax or other professional advice. You should always seek professional or specialist advice or support before doing anything on the basis of the content of this article. 

Neither British Business Bank plc nor any of its subsidiaries are liable for any loss or damage (foreseeable or not) that may come from relying on this article, whether as result of our negligence, breach of contract or otherwise. “Loss” includes (but is not limited to) any direct, indirect or consequential loss, loss of income, revenue, benefits, profits, opportunity, anticipated savings, data. We do not exclude liability for any liability which cannot be excluded or limited under English law.

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