Hire Purchase is a type of financing option that allows borrowers to acquire a vehicle by making regular payments over time. Under a hire purchase agreement, the borrower makes an initial down payment followed by monthly instalments. Ownership of the vehicle is transferred to the borrower only after the full loan is paid off.
Vehicle loans, also known as auto loans, also allow borrowers to purchase a vehicle through regular repayments. However, unlike hire purchase agreements, a vehicle loan typically does not transfer ownership until the loan is fully paid. This is similar to how a mortgaged house technically remains under the lender’s name until the mortgage is fully settled.
In some jurisdictions, the cost of depreciation may be tax-deductible for businesses that use vehicles for commercial purposes — depending on how ownership is structured. You may wish to consult with your accountant or one of our community accounting partners for guidance on this.
Some lenders or salespeople may use the term leasing interchangeably with hire purchase. However, there are key differences, especially around tax implications. For simplicity, our platform treats the two as functionally similar, with lenders clarifying such distinctions under the “Misc” column on your dashboard.
To learn how to interpret these loan details and compare options, visit our FAQ on how to compare loans and understand your dashboard.
Hire purchases aren’t limited to vehicles — they can also be used for industrial and office equipment. Many buyers default to in-house instalment plans offered by sellers, but it’s worth checking if an external financing option could offer better terms.