Asset Finance – Comparison of Types – Hire Purchase vs Finance Lease vs Operating Lease vs Contract Hire
Comparing Various Types of Asset Finance
As a borrower, you may feel the need to compare the various types of Asset Finance before finalising one. To help you in this regard, we have assembled a table that sums up the key features of 4 major types of Asset Finance.
| Hire Purchase | Finance Lease | Operating Lease | Contract Hire | |
|---|---|---|---|---|
| Who owns the asset? | You | Lessor | Lessor | Lessor |
| Do repayments incur an interest? | Yes | No | No | No |
| Can you claim capital allowances? | Yes | No | No | No |
| Tax deductible component | Interest on repayments | Rentals | Rentals | Rentals |
| Can the asset remain off-balance sheet? | No | No | Yes | Yes |
| Is the VAT on repayments reclaimable? | No | Yes | Yes | Yes |