Hire purchase is suitable for financing your company’s investments if the economic life of the acquired object is long. Your company will become the owner of the object after the agreement period has expired
You can use hire purchase to acquire objects such as production and work machinery, transport equipment and other equipment needed in your business operations. The object may be new or used.
- The financed object serves as security
- You will always have up-to-date equipment
- Compatible with investment aid from the Centres for Economic Development, Transport and the Environment
- Easier budgeting and financial planning
The use of financing is governed by the Hire Purchase Act. The financier has the right of reservation of ownership to the financed object throughout the financing period, but your company can post depreciations in bookkeeping in normal fashion. The interest on a hire purchase instalment is a tax-deductible expense, and you can deduct the VAT from the entire purchase price right away. Your company will automatically become the owner of the item when you have made the last payment.
- The down payment may include both cash and trade-ins
- Maximum financing period 5 years
- You can repay in equal payments or equal instalments
- The object must be delivered acceptably before payment to the seller
- The object must be insured
- You can repay the entire amount of financing in the middle of the agreement period without extra costs