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Under Hire Purchase, the Hirer will be able to make their payments for the equipment on a regular instalment basis over a fixed repayment term. Thus, granting the Hirer a better cash flow management as the equipment is paid off in tandem with the productive use of the equipment. Ownership of the equipment will be transferred to the Hirer upon completion of the repayment term.
Company B is a third-party logistics company that deals with the storage and distribution of goods in their daily operation. In order for their business to propel to a new height, they feel they would need to expand their warehouse. However, this expansion project will be expensive to invest in as the company will require a large investment to buy various equipment to support the scaled up daily operations. They are looking at acquiring a new 7-Ton Forklift and storage racks for the first phase of their expansion.
The price of forklift is $35,000, while the storage rackings would demand a hefty price of $0.5 million. In order to expand their warehouse without affecting their cash flow, they approached ETHOZ Capital for financial advice on this matter.
They were recommended to acquire their equipment through hire purchase over a period of 3 years. Full ownership of the equipment will be transferred to Company B upon completing payments at the end of the Hire Purchase agreement. The owner of Company B found the overall process very satisfying with easy application, fast approval and personalised service.
ETHOZ has offered Company B the following terms:
Interest Rate : 4% flat per annum
Monthly Repayment : $16,644.44 x 36 months
In this example, Company B does not have to fork out $0.535 million straight up to expand its warehouse facilities. Instead, Company B only pays $16,644.44 per month through a Hire Purchase agreement and this helps them to generate revenue in tandem to the hire purchase payment.
* Disclaimer: Example above is merely shown for illustration purpose to better allow readers to understand the uses of each financing solution. Figures and interest rates listed above are not representative; it may differ based on each company’s requirements and management’s approval. Additional terms and conditions may also apply based on the credit assessment and evaluation conducted during application. ETHOZ Capital Ltd and its employees make no representation or warranty, whether expressed or implied, and accept no responsibility for the completeness or accuracy of the computation.
Not sure how this works for your company? Talk to our Relationship Managers at 6654 7799 or email us to find out more!