The right tools and equipment are integral for any successful business. They help your business run smoothly, reduce human error, and the dependence on workforce.

However, assets are a huge financial commitment and so you have to plan carefully before getting into such a huge financial commitment.

If you have ever tried to stock up on machinery, then you have come across the dilemma between hire purchase and leasing. Let’s talk about these two terms once and for all.

What is Hire Purchase?

Hire Purchase refers to an arrangement whereby you get to purchase assets by spreading the payment over a period of time. The moment you make the first payment, you are allowed to take the asset with you and begin to use it.

The initial payment is usually a percentage of the total cost, typically 10-25% of the total cost. The remaining amount is equally staggered through a period of time, typically 12-72 months. The moment you make your final payment, the asset is yours.

Hire Purchase is great because the asset is already in your possession and working for you as you continue to pay. So, essentially, the asset pays for itself.

What is Leasing?

When you lease an asset, you become a Lessee. The person who leases the asset to you is called a Lesser.

Now, the Lesser maintains ownership of the asset. You, the Lessee, pay for usage of the asset on a monthly basis. The amount is predetermined and included in the contract.

Leasing follows two major paths.

  1. Operating Leases

Operating leases are similar to any rental. You will never own the asset and only use it under the lease agreement. If there are any maintenance issues, they are the responsibility of the Lesser.

Operating leases are perfect if you only need to use the asset for a short period. Also, since you do not incur any additional maintenance costs, you can easily quantify the cost as well as lose it anytime you want. Plus, you will never have an obsolete asset turned liability in your hands.

  • Finance Leases

Finance leases, like operating leases, let you use an asset for a fee. However, all the maintenance costs are your responsibility.

Finance leases work for big assets like leasing an entire factory.

Why you need us

Leases and Hire Purchase agreements are complex. We, at Hyaat Capital employ financial experts who can advise you on the best path to take. Plus, we can help you find the right financing to cover the cost of obtaining your asset.

Talk to us today.

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