Hire Purchase and Leasing
- Created by: SteveMy
- Created on: 03-02-23 10:49
View mindmap
- Hire Purchasing and Leasing
- Fundamentals of Hire Purchasing and Leasing
-
Hire
purchase agreements are not seen as an extension of credit.
-
In a hire
purchase agreement, ownership is not transferred to the purchaser until
all payments are made.
- Hire purchase agreements usually prove to be more
expensive in the long run than purchasing an item outright
- Leasing a car means that you basically rent it for a
specific and limited time period.
- Buying a car means you own it outright and build equity in the vehicle with monthly payments
- Leasing a car means that you basically rent it for a
specific and limited time period.
- Hire purchase agreements usually prove to be more
expensive in the long run than purchasing an item outright
-
In a hire
purchase agreement, ownership is not transferred to the purchaser until
all payments are made.
- Benefits of leasing usually include a lower upfront
cost, lower monthly payments, and no resale hassle.
- Benefits of buying usually mean car ownership,
complete control over mileage, and a firm idea of costs
- Experts generally say that buying a car is a better financial decision for the long term.
- Benefits of buying usually mean car ownership,
complete control over mileage, and a firm idea of costs
-
Hire
purchase agreements are not seen as an extension of credit.
- Pros
- Hire purchase agreements allow companies
with inefficient working
capital to deploy
assets
- Businesses that require expensive machinery such as
construction, manufacturing, plant hire, printing, road freight, transport, and
engineering
- It can also be more tax-efficient than standard loans
because the payments are booked as expenses
- A lease can slightly ease the financial
burden of monthly costs.
- Leasing arrangements can potentially eliminate some
significant, unforeseen expenses.
- A lease may afford you more tax deductions than a loan
- Leasing arrangements can potentially eliminate some
significant, unforeseen expenses.
- A lease can slightly ease the financial
burden of monthly costs.
- It can also be more tax-efficient than standard loans
because the payments are booked as expenses
- Businesses that require expensive machinery such as
construction, manufacturing, plant hire, printing, road freight, transport, and
engineering
- Hire purchase agreements allow companies
with inefficient working
capital to deploy
assets
- Cons
- Hire purchase agreements usually prove to be more
expensive in the long run than making a full payment on an asset purchase as
they have a higher interest cost.
- Hire purchase and instalment systems may tempt
individuals and companies to buy goods that are beyond their means
- The restrictions of a lease can impede how much and
how far you wish to use the good or service
- You can't sell or trade the good to gain extra money
- The restrictions of a lease can impede how much and
how far you wish to use the good or service
- Hire purchase and instalment systems may tempt
individuals and companies to buy goods that are beyond their means
- Hire purchase agreements usually prove to be more
expensive in the long run than making a full payment on an asset purchase as
they have a higher interest cost.
- Who Would Provide this Type of Finance
- Businesses that need to use an asset over a fixed time period rather than having it all the time.
- What Type of Business is it Suitable for?
- Car business use this type of finance for example Toyota and Mercedes-Benz
- Tool Hiring companies would use this, for example Dale Hire or HSS tool hire
- What Factors would affect the choice of this Source of Finance
- If you have the
ability to buy the product there and then or if you need always rather just for
a period.
- Cash flow or credit history will be affecting your choice to as people want to make sure that you can pay for this product.
- If you have the
ability to buy the product there and then or if you need always rather just for
a period.
- Fundamentals of Hire Purchasing and Leasing
Comments
No comments have yet been made