What is the difference between hire purchase and a finance lease?

With hire purchase, you make fixed monthly repayments and own the asset outright at the end of the agreement (usually after paying a small final 'option to purchase' fee). With a finance lease, the lender retains ownership of the asset throughout. You use it in exchange for regular payments, and at the end of the term you typically have the option to continue leasing at a reduced rate or receive a share of the sale proceeds. Finance leases can have tax advantages as lease payments may be fully deductible.

Related questions