What deposit is typically required for hire purchase?
Short answer
Most hire purchase agreements for business assets in the UK typically require a deposit of between 0% and 30% of the asset’s value, with a common range of 10%–20% depending on the lender, the asset type and the borrower’s credit profile.
Exact deposit requirements vary widely by lender, asset condition, and whether the borrower is a start-up or an established SME.
Typical deposit ranges and what they mean
Hire purchase deposits for business use commonly fall between 0% and 30% of an asset’s invoice value. Lenders often favour 10%–20% deposits as a balance between client affordability and lender risk.
A higher deposit reduces monthly payments and the finance charge, and can improve approval chances for businesses with weaker credit. Some lenders or brokers will offer 0% deposit deals for prime customers or on short-term promotions, but these can come with higher monthly costs or stricter acceptance criteria.
Key factors lenders consider when setting deposit levels
Asset type matters: vehicles, machinery and IT equipment attract different deposit expectations because their residual values and resale markets vary. New, high-value or specialist assets may require larger deposits than common used equipment due to higher replacement costs.
Borrower profile is also vital: turnover, profitability, time trading and credit history directly affect deposit size. Lenders use deposits to mitigate risk, so a business with limited trading history or low credit scores will often be asked for a larger deposit.
How industry, asset age and term affect deposit requirements
Used equipment and older vehicles usually need higher deposits because their resale and maintenance risk is greater. Conversely, brand-new assets with manufacturer warranties can sometimes qualify for lower deposits or vendor-backed deals.
Length of the hire purchase term matters too: shorter terms often mean higher monthly payments but may allow lower deposits overall; longer terms spread cost but can increase total finance charges. For asset-specific guidance, consider exploring asset finance options tailored to your sector, such as our asset finance overview.
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Negotiation, alternatives and ways to reduce your deposit
You can sometimes negotiate deposit size by demonstrating strong cash flow, providing additional security or choosing a slightly shorter term. Brokers and specialist lenders may be more flexible than high-street banks for specific asset classes and can often source lower-deposit solutions for eligible applicants.
Alternatives include leasing (which can require little or no upfront deposit), conditional hire-purchase promotions, and vendor finance. Compare options and ask for a Decision in Principle or Quick Quote so you can see likely deposit expectations before formally applying.
How to prepare and next steps (including key takeaways and CTA)
Prepare clear bookkeeping, recent accounts, and evidence of cash flow to help reduce deposit demands and speed up decisions. Know the asset’s invoice price, intended use and projected life; lenders will assess those details when setting deposit terms.
Key takeaways: typical hire purchase deposits range from 0%–30% with 10%–20% common, and amounts depend on asset type, borrower history and lender appetite. Best Business Loans does not provide loans directly; we help UK businesses find suitable lenders and brokers and guide you through deposit expectations.
If you want a quick, no-obligation view of likely deposit levels and terms for your situation, submit a Quick Quote now and get matched to suitable providers. Start your Quick Quote to check eligibility and get a Decision in Principle quickly.
About Best Business Loans
Best Business Loans helps UK businesses compare finance routes using AI-driven matching and an established lender network. We act as an introducer to lenders and brokers to help you find relevant hire purchase and asset finance solutions without charging you to start a quote.