What is hire purchase?

Financing your company’s investments with hire purchase ensures monthly payments that suit your budget. Hire purchase agreements can be made for both new and used assets. The financed asset itself serves as security so there is no need for separate security. After the agreement period has expired, the ownership of the asset will be transferred to your company.

Depending on your company’s finances and investment needs, hire purchase may just be the right solution for you.

The asset acquired with hire purchase is entered in the company’ balance sheet and the interest is tax-deductible. In some cases, hire purchase can be a significantly more cost-effective way to finance an investment compared to leasing financing or a loan, for instance.

Benefits of hire-purchase financing

  • The purchased asset, such as a tractor, truck, crane or forestry machine, serves as collateral. This allows you to free up capital to invest in other areas of your business.
  • You pay a fixed monthly instalment.
  • You can repay the entire loan at any time during the agreement period.
  • VAT-deductible from the start of the agreement period.
  • A safe form of financing governed by the Finnish hire-purchase act.
  • Seasonal fluctuations are possible, and you can apply for repayment holidays under the hire-purchase agreement – under certain circumstances, with no additional costs.

How hire purchase works

  • You choose a suitable machine or device for your business with our vendor partner and negotiate the conditions directly with the vendor. There is no need for separate contact – you negotiate the conditions of the hire-purchase financing with the vendor.
  • In connection with the purchase, we will make you a proposal for hire-purchase financing with the desired credit period.
  • The deposit or a trade-in is usually 20–30% of the cash price.
  • You get the credit decision in connection with the deal.
  • The financing agreement takes effect when you have signed and accepted the delivery of the asset and paid the deposit.
  • We invoice your company according to the hire-purchase agreement.

Consider hire-purchase financing for your company

  • If you want to use the purchased asset as collateral for your financing. 
  • If you want to own the machinery or equipment after the agreement period. 
  • If you want to keep the asset on your company’s balance sheet so you can manage the depreciation.
  • If you value the option of deducting the value-added tax on your investment.
  • If you value the possibility to pay off the financing earlier.

What machinery and equipment can I buy on hire purchase?

At Nordea Finance, we have extensive experience in several industries. Here are some examples of machinery and equipment that can be financed on hire-purchase agreements.

Agriculture and forestry machinery

tractor

Forestry machinery, tractors, balers, combine harvesters and other agricultural machinery.

Excavation and earthmoving equipment

construction

Excavators, wheel loaders, dumpers and other earthmoving equipment

IT and office equipment

computer

Office equipment, IT equipment (software and hardware) and healthcare devices.

Transport equipment and logistics

tractor-1

Trucks, vans, trailers, pickups, forklifts and buses.

What are customers saying about hire-purchase financing?

“If you want to own”

Business woman in officeWe purchased a new wheel loader for our company on hire-purchase financing. Hire-purchase financing felt like a suitable option for us because we can repay the financing in monthly instalments that fit into our company’s budget. Once we have repaid the financing, we will be the owners of the wheel loader.

“An asset item”

Male and female colleagues discussing at workplace

Our company is a contractor, and we bought an excavator on hire purchase. By using hire purchase as a financing option, we were able to utilise the depreciation in our accounts and prepare our business better for future seasonal variations with smaller monthly instalments in the winter.

“The vehicle secures the financing”

Portrait of female owners in food truck parked on city street against buildingI run a bakery, and I used hire-purchase financing to buy a van for sales events. I think it is a good form of financing because the vehicle serves as collateral, and I am repaying the hire-purchase financing in monthly instalments that fit my business.

Hire purchace's Tariff

Valid from 1st of January 2023

Hirepurchase's Tariff for Corporate Customers

An arrangement fee of 0.5% on the agreement capital, 

domestic / import agreements, min.

300 / 600 €
Invoicing fee9 €

Drafting of a preliminary agreement (incl. the first payment),

following payment(s)

175 €

90 €

Extension of the preliminary status per agreement175 €
Documentary credit or forward trade850 €

Bank guarantee, domestic

foreign

175 €

350 €

Personal or corporate guarantee, per guarantee
90 €
Other security (e.g. pledge)175 €
Change to repayment plan200 €
Larger one-time instalment50 €
Assignment of an agreement, mergers300 €
Change of due date
50 €
Registration / changes (registration costs subject to Traficom’s currently valid tariff are added to the price)
30 €
Partial redemption of assets under the agreement / object
100 €
Copy of receipts / agreements, written confirmation or ordered reports30 €
Interest statement or confirmation of balance; in accordance with section 4a of the Finnish Debt Collection Act, one itemisation per year free of charge, subsequent itemisations
30 €
Liabilities statementIn accordance with the bank's tariff
Driving instruction permit30 €

Export registration,

urgent/same-day processing

50 €

75 €

Power of attorney regarding cash settlement to the insurance company50 €

Investigations / alterations agreed on separately; hourly rate, minimum fee 100 €

100 € / h
Reminder letter/call12 €
Draft42 €
Protesting a draft58 €
The prices are without VAT. This prices can vary based on the terms of the contract. In addition, any external costs that are caused for Nordea Finance from the procedures will be charged. When determining the fees for applying changes to a collection and payment plan, we always follow the valid debt collection legislation.