The most popular way to own the asset at the end of your finance agreement. You will usually pay a deposit including the whole VAT amount at the beginning. The remaining balance, plus the interest and any fees are then spread into scheduled fixed payments, usually between 1 & 5 years. Once the last payment has been made, you own the asset outright. Also, as you own the asset, this finance option allows you to claim capital allowances.

Benefits

• Repayments are often flexible, you can even choose a seasonal repayment plan if that suites your cashflow better.
• The interest rate is fixed for the duration of the agreement.
• Relatively low initial deposit required, sometimes just the reclaimable VAT will suffice.
• There is no final lump sum at the end of the agreement and you will own the asset out right.

Potential Risks

• The loan is secured against the asset, therefore if you miss any payments, the asset may be repossessed.
• You don’t own the asset until the final payment is made.

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