hp variable

Benefit if interest rates fall.

A variable rate hire purchase (HP) agreement comprises of fixed repayments of capital and repayments of interest which is calculated daily against the reducing balance. This is popular when interest rates are expected to fall, or you expect to end the entire agreement early or pay off lump sums.

The interest is calculated daily at an agreed percentage over the NatWest base rate and is payable and invoiced monthly or quarterly (as per your preference) – payable via a Direct Debit.

It is also possible to end the entire agreement early and only pay interest up to the date of settlement, or pay off lump sums and further reduce the overall interest charges. As the interest charged would increase in the event of a rise 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 once all capital and interest payments have been made, including the option-to-purchase fee.

Benefits of HP Variable:

• You will own the goods after the final payment
• Enjoy savings when interest rates fall
• Fixed repayments of capital
• Interest payments may be made monthly or quarterly
• Ability to pay off lump sums and save on interest
• Interest is calculated daily, which is beneficial if lump sum or early settlement payments are likely
• VAT is usually fully reclaimable
• Interest charges are usually tax allowable
• Tax writing-down allowances may be available including the Annual Investment Allowance or Corporation Tax full expensing
• The asset itself offers the security to the lender, therefore other forms of security such as personal guarantees or property are usually not required.

What happens at the end:

You pay a nominal option-to-purchase fee at the end of the agreement, and ownership transfers to you.

Want to end your agreement early?

The capital balance reduces as each repayment is made. The interest may be subject to change and is calculated daily and you only pay interest up to the date of the settlement.

You can request a calculation at any point during the agreement which will show you how much you would need to pay if you wanted to end the agreement early. The goods are yours when all payments have been made.

Thinking of ending early? Request a cancellation

How it compares:

Other considerations:

Assets on the agreement may be repossessed if you do not keep up with the payments

Typically, the minimum balance to finance on any agreement type with JCB Finance is £5,000.