Hire Purchase

Hire purchase allows your business to purchase equipment without initial capital outlay. A hire purchase plan usually starts with an initial down payment, followed by monthly payments for a fixed period. After all payment terms are fulfilled, you have the option to own the asset.

Benefits of Hire Purchase

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Improve Liquidity

The key benefit of hire purchase is low initial down payment. This is beneficial if your business needs to obtain expensive equipment but may not have the necessary capital. This is also recommended if you do not want to increase your debt burden by borrowing money.

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Ownership of Asset

Hire Purchase is the ideal solution if your business has the intent of owning the equipment in the long run. This allows your business immediate access to the use of the equipment, with the asset ownership at the end of the agreement.

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Repayment Terms

The agreed repayment terms allow you to do business financial planning. At ETHOZ, we offer a flexible frequency of instalment payment terms to make budgeting easier for you. The payment terms may be monthly, quarterly, half-yearly, or annually, as per the terms of the agreement.

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Improve Liquidity

As a business owner, cash flow distribution is an important concern. To acquire equipment for your business needs, making a large sum purchase may not be the wisest option. With a low initial down payment, leasing is a more cost-effective option that allows you to acquire equipment. This frees up cash flow for other areas of priority such as business expansion.

ownershipasset.png

Ownership of Asset

Hire Purchase is the ideal solution if your business has the intent of owning the equipment in the long run. This allows your business immediate access to the use of the equipment, with the asset ownership at the end of the agreement.

repayment.png

Repayment Terms

The agreed repayment terms allow you to do business financial planning. At ETHOZ, we offer a flexible frequency of instalment payment terms to make budgeting easier for you. The payment terms may be monthly, quarterly, half-yearly, or annually, as per the terms of the agreement.

Financing Example

1 Hire purchase Singapore
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.
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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 equipment financing advice in Singapore.

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 of equipment financing 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
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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.

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