HP Equalised Payments is a variable rate Hire Purchase product that is a way of spreading the cost of buying JCBs, plant, equipment and vehicles with interest calculated at an agreed percentage over a base rate and to help with cash flow planning, unlike the standard HP Variable facility, the regular payments are fixed, made up of the capital balance borrowed, and estimated interest.
The interest is estimated as any changes in either the underlying base rate or the payments made by you and the timing of them. The actual interest charge is calculated on a daily basis and is applied to the balance outstanding monthly or quarterly in arears.
If the actual interest and estimated interest are the same i.e. no changes in the underlying base rate and all payments are made as per the schedule, then the agreement period of hire will be as per the schedule. However, as the actual interest due will go up or down depending on changes in the underlying base rate, the period of hire may be longer or shorter until capital and interest are paid.
If there is any shortfall in the interest paid vs the actual interest charged, this will be added to the balance as a deferred charge and interest will be calculated as per the schedule.
Payments made are applied to the balance outstanding in the order of; the actual interest due, the deferred charge, any interest on the deferred charges and then finally to the reducing capital balance.
HP Equalised Payments offers an advantage if you believe rates will go down and it may be a cost-effective option if you are likely to settle the agreement early because you will only be charged interest for the amount borrowed for the duration of the borrowing. However, as the interest rate is not fixed, if you believe interest rates will go up, you may wish to consider the HP Plus facility which has similar cost savings if you settle the agreement early but interest is calculated at a fixed rate so you are protected against base rate increases.
Ownership of the goods will be yours when you have made all payments including an Option to Purchase Fee.
VAT relating to the purchase price is usually payable at the start of the agreement and is usually reclaimable. Tax relief may be available, including the Annual Investment Allowance or Corporation Tax full-expensing relief.
The typical duration 1 year to 5 years, borrowing over £5,000.
Goods may be repossessed if you do not keep up with repayments.
HP Variable is not available on regulated credit agreements (i.e. if you are a sole trader or partnership with 3 or less, borrowing up to £25,000).
What happens at the end?
You pay a nominal option-to-purchase fee at the end of the agreement, and ownership transfers to you.
How to apply
Call us on 0800 150650 and speak to one of our Relationship Managers. Open Monday to Friday 8.30am to 4.45pm, excluding Bank Holidays. See How to apply for finance for more details.
How does this compare:
Disclaimer
Finance provided and subject to acceptance by JCB Finance Ltd (Registered in England No.972265 Registered Office: The Mill, Rocester, Staffordshire, ST14 5JW) who are registered with the Financial Conduct Authority as a lender. UK business users only. Terms apply. Subject to your consent, JCB Finance Ltd will pay a commission to the UK JCB dealer network which is a flat fee plus basic rate tax and employer National Insurance contributions for each JCB machine on the finance agreement. These payments are not additional fees that you will have to pay and is not added to the amount you pay under your finance agreement. Other products are available see JCB Finance Finance Options Explained
FAQs
What if the base rate changes?
The interest is calculated on a day-to-day basis on the reducing balance so the interest payable will go down if base rate decreases and up if the base rate increases.
Your payments documented in the agreement schedule will remain the same but the period may be shorter or longer dependant on your balance outstanding including actual interest charged.
Can I cap the interest rate charged?
Yes, you can request that a minimum base rate and maximum base rate is documented from the outset, this may minimise your risk if base rates rise but likewise may minimise the potential saving if base rate falls. Terms apply.
What happens if your payments don’t cover the actual interest due?
JCB Finance can review the outstanding balance and any unpaid interest (deferred charge) on or before the 3rd anniversary of when your agreement started and will communicate a decision to extend the period of hire at the current payment levels, adjust the payment values for the remainder of the period, or notify you of a balancing payment required.
Can I make changes once the agreement has started?
Some changes are possible e.g. changing monthly payment date. Fees and/or additional interest charges may apply if you wish to make a change after the agreement has started.
Can I end early?
If you wish to settle your agreement early you can request a quote via your JCB Finance Online account or email settlements@jcb-finance.co.uk or call 0800 150650.
What are the fees?
HP Equalised payments has an acceptance fee, payable with the first payment after the agreement has started and an Option To Purchase fee payable with your final payment. These are documented from the outset.
Do I have a lump sum to pay at the end?
You may choose to have a final lump sum ‘balloon’ repayment – this would reduce the amount you pay in your regular payments, but the balloon must be paid by you in full when it is due. The amount due would feature on your quotation and documented on your agreement from the outset. Having a balloon is likely to result in you paying more interest so speak to JCB Finance for details.
What if my circumstances change?
Contact the Customer Services Team on 01889 594101 or customerservices@jcb-finance.co.uk who will be happy to assist you and discuss what options are available. Open Monday to Friday, 8.30am to 4.45pm (excluding Bank Holidays).
What if I want to sell the goods?
You cannot sell (or pass title) to any goods until you are the legal owner. When all payments have been made, including the Option To Purchase Fee stipulated on your agreement you have ownership of the goods.
If you wish to settle your agreement early you can request a quote via your JCB Finance Online account or email settlements@jcb-finance.co.uk or call 0800 150650.
What about insurance?
You have a duty under the agreement to insure the goods on a comprehensive basis.
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