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Hire purchase agreement templates
A well-written hire purchase agreement helps businesses access equipment quickly without paying costs upfront.
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A business doesn't always have the capital behind it to make expensive purchases outright. Luckily, a hire purchase agreement provides a flexible financing option, so your business doesn't need to wait to use the equipment in question.
If you're looking for a hire purchase agreement template to help you to draft up this important document, you're in the right place.
What's in this guide?
What is a hire purchase agreement?
A hire purchase agreement is a legally binding contract between an equipment owner and a person who wants to hire the equipment. The agreement allows the business owner to access the equipment straight away without paying for it upfront. Instead, the hirer will agree to make regular fixed payments to spread out the equipment's cost. Once the final payment is made, the ownership of the equipment is transferred to the hirer.
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More on where to find hire purchase agreement templates
There are plenty of places to find a hire purchase agreement online, including the following market leaders:
- Lawpath. Pay a one-time fee to access a hire purchase agreement from Lawpath that you can customise and download.
- Law Live. Get your hands on a hire purchase agreement template tailored to your needs.
- LegalVision. Consult an expert at Legal Vision to help draft up your hire purchase agreement for a fixed fee.
- Sprintlaw. Sprintlaw is an Australian-based company that can help you prepare a hire purchase agreement or review a document you've already written.
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Understand when to use a hire purchase agreement template
Typically, hire purchase agreements are used by businesses or individuals who do not have the funding behind them to buy the equipment outright. Therefore, this contract acts as a type of flexible equipment finance.
For example, a new gym has just opened in town but doesn't have the money to purchase all of the treadmills, bikes and weight machines out front. Instead, the gym owner agrees with the equipment owner to make regular payments until the total price of the machines has been paid. When the total amount is paid, the gym owner retains full ownership of the equipment.
In a hire purchase agreement, the equipment can refer to anything, including the following:
- Heavy machinery
- Vehicles
- Power tools
- Catering equipment
- Computers and IT equipment
- Sports equipment.
How is a hire purchase different from lease financing?
A hire purchase agreement and lease financing agreement are both useful ways to finance an equipment purchase. However, they are different in many ways. While a hire purchase will eventually transfer ownership to the hirer, a lessee will not have the option to purchase the equipment once the contract is finished.
In lease financing, the equipment owner simply transfers the rights to use the equipment to the hirer. Generally speaking, lease agreements are used for longer-term rentals of bigger assets, including property and land. Hire purchase agreements, however, are short-term contracts for a medium-sized asset such as car or machinery.
What should I include in my hire purchase agreement?
Using an online legal template will give you a good idea of what should be included in your hire agreement.
Typically, a hire purchase agreement format should cover the following:
- Personal details of both parties involved, including their name, address and contact details.
- Description of the goods hired, including how the goods are to be delivered and installed. You should also include how the goods are to be used and maintained by the hirer.
- Terms of the agreement, including the dates the hire takes place, and when the final payment is due.
- Payment schedule, including rent, taxes, interest and other fees. You should also include clauses on what rights the equipment owner has if the payments are not made.
- Liability. Your agreement should clearly state who is responsible if the equipment is damaged, lost or stolen.
- Term of hire and date of purchase, including information on what happens at the end of the hire purchase agreement.
- Dispute resolution, including what happens if you reject or dispute with the clauses in the hire purchase agreement.
How can a hire purchase agreement help me?
By clearly defining the terms and conditions of the hire purchase agreement, this document can help both parties avoid legal troubles later down the line. As well as allowing both parties to understand their rights and obligations in the deal, your hire purchase agreement can be used as written evidence in a Court of Law, safeguarding the interest of both the equipment owner and hirer.
Do I need a lawyer to write a hire purchase agreement?
When you enter into a hire purchase agreement, it's highly recommended that you get in touch with a business lawyer. A good lawyer will be able to draft and review a hire purchase agreement for the equipment owner (lender) and the customer (borrower) so that the terms of hire are clear and fair.
If you don't want to fork out on expensive legal fees, take a look at the services provided by online services such as Lawpath and Sprintlaw. Both companies offer fixed-fee quotes, so you know exactly how much the bill will be at the end of the day.
How do I write a hire purchase agreement?
If you're thinking about writing up your document yourself, you can take advantage of the many hire purchase agreement templates available online.
However, if you're not familiar with the terms of hire, then it is advisable to have your agreement reviewed by a lawyer. Likewise, if you are a company lending out equipment, you can have a lawyer draft up a hire purchase agreement that protects your business to its utmost.
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