Fix the payment and float the period

A variable rate hire purchase agreement that makes budgeting easier because of the equal fixed monthly repayments of capital and estimated interest. The actual interest is calculated daily based upon the NatWest base rate. Any movement in the base rate is used to reflect either the shortening or lengthening of the repayment period - hence we describe it as ‘fix the payment and float the period’. Like other variable rate options, this is popular when interest rates are expected to fall, or you expect to settle the entire agreement early or pay off lump sums.

As the interest charged would increase in the event of an increase in the NatWest base rate, customers who expect the rates to go up may wish to consider HP Plus as a fixed interest alternative with similar lump sum / early settlement benefits. The goods become yours when all payments have been made.

Note: HP Equalised Payments is not available on regulated credit agreements (i.e. if you are not a limited or public company, limited liability partnership, a partnership with four or more partners, or are borrowing £25,000 or less.)

Benefits of HP Equalised Payments:

• The goods are yours after the final payment
• Enjoy savings when interest rates fall
• Fixed repayments of capital and estimated interest
• No monthly/quarterly interest bills
• Ability to pay off lump sums
• VAT is usually fully reclaimable
• Interest charges are usually tax allowable
• Tax writing-down allowance may be available, including the Annual Investment Allowance and super-deduction

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 it compares: