What is hire-purchase financing for vehicles?

When you buy a vehicle on a hire-purchase contract, it is recognised in your company’s balance sheet, and the interest you pay is deductible in your company’s financial expenses. In some cases, hire-purchase finance of a vehicle is a much more economical option than, for example, financial leasing or a bank loan.

You repay your hire-purchase debt to Nordea Finance in pre-agreed instalments, and you can also make extra repayments. You can pay off the debt under your hire-purchase contract whenever you want. At the end of the contract term, your company takes ownership of the asset.

Benefits of hire-purchase financing of cars for your company

A fixed-interest hire-purchase agreement is a form of financing with predictable monthly instalments. 

Benefits of hire-purchase finance:

  • Hire-purchase finance can be used to buy a new or used car. The make and model does not matter. 
  • The vehicle secures the financing, so your company does not need any other collateral. 
  • Purchase a vehicle for your company in suitable instalments.
  • Get a credit decision in connection with the deal.
  • You can pay off your debt at any time.
  • The vehicle is recognised on your company’s balance sheet, and you can depreciate it in full.
  • By choosing Nordea Finance for your vehicle financing, you will have access to the comprehensive services and experience of a secure finance company with long experience in the finance sector. 

Who is hire-purchase financing of cars for?

Hire-purchase financing of cars is suitable for companies:

  • that need to replace a company car or fleet
  • that need to divide the costs into predictable, equal monthly instalments
  • that want the asset to become the company’s property at the end of the hire-purchase contract.

Tip: If you intend to update your company’s vehicle fleet regularly, leasing may be a better alternative.

How hire purchase works

  1. Choose a suitable car for your business needs at our sales partner’s showroom.
  2. The car secures the financing, so you do not need any additional collateral.
  3. Send an application to Nordea Finance with the salesperson. 
  4. Once the credit decision has been approved, you can sign the contract digitally, if possible.
  5. Your company repays the hire-purchase debt to Nordea Finance in pre-agreed monthly payments. The monthly payment includes the instalment, interest and costs of the contract.

Hire purchase or leasing to finance cars?

When you buy a car on a hire-purchase contract, the goal is to own the car, while leasing means renting a car for a fixed period. We have made the comparison easy for you, so take a look at the differences between hire-purchase financing and leasing.