Hire Purchase is a financial agreement in which the customer effectively hires the vehicle from Chatfields for an agreed fixed term at the end of which, upon payment of an agreed nominal Option to Purchase fee, ownership passes to the customer. Whist legal title in the asset will belong to Chatfields until the end of the agreement; the hirer is the Registered Keeper and may show the asset on their balance sheet and claim the appropriate Writing Down and Capital Allowances. An initial deposit is paid, together with the full VAT amount. Customers are then able to reclaim the VAT in their next returns. The HP installments are based on outstanding capital and interest. Once the Option to Purchase has been exercised, the customer is free to dispose of the asset, retaining the full proceeds from the sale.

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