Hire purchase is an easy finance option to understand. It is the most common method to finance a vehicle here at Car Finance Deals.
What is Hire Purchase?
Hire purchase (HP) is an arrangement where you hire the car or vehicle from a finance lender until you have paid for it in full. You would repay the lender a set amount each month and when the final payment is made; it’s yours to keep. No deposit is necessary however obviously; any deposit will lower the monthly payments.
How does Hire Purchase work?
When you are ready to buy a vehicle; apply online with us here at Car Finance Deals. We will then pass your application over to the lenders and choose the best deal we can tailored for you. Once approved; you can decide over how many years you want to repay the loan and whether you want (or need) to pay a deposit. Then the fun part; selecting your vehicle. You can choose from thousands of vehicles in the UK or we can help select a vehicle for you.
Click on the following link to apply: https://www.carfinancedeals.com/apply
What happens when you get to view the vehicle?
This is the best part. Travel to the dealership and if you like what you see; drive it away! Because the paperwork has been done; all you need to do is decide if you want the vehicle or not! No hassle.
What is the difference between Hire Purchase and a loan?
When taking out a loan; the car is yours as soon as you buy it. You obviously still need to pay the loan off, plus any interest. With Hire Purchase the car is not yours until you have made the final payment, as the loan is secured against the value of the car.
What happens at the end of the HP finance deal?
You will become the owner of the vehicle and it will be yours to do what you like with.
What happens if i miss a payment?
If you miss a payment your car or vehicle could be repossessed. It would be worth checking how missed payments are dealt with before you sign up to your finance agreement. Also; missing any credit payment may affect your credit score.
Can my car really be repossessed if i miss a payment?
You are effectively breaking an agreement so you are at risk yes. How easily this could happen can depend on how much of the outstanding balance is left to pay on the finance agreement. For more information please check the Competition and Consumer Protection Commission website.
How do i get the best HP deal?
This is not straight forward as every agreement will suit different people depending on there financial circumstances. A deal taken out over a shorter time will more likely require higher monthly payments than a deal taken out over a longer period. There is of course the option to pay a deposit (of how much is usually decided by you) that would lower the monthly repayments also. Ultimately it will depend on what you feel comfortable in repaying each month.
Do remember you are applying for finance and presuming you are approved; you will be given the best rate that the finance lender will offer you. This is not a negotiation process. The offer is the set offer and the only way to improve the interest rates being given would be by improving your own credit score. For more information on improving your credit score, please check the Car Finance Deals guide by clicking here.
Hire Purchase Pros and Cons
Work out whether HP is right for you
The car or vehicle is yours once you make the final payment.
In most cases, no deposit is necessary.
Convenient straightforward application process.
Fixed repayments and interest rates.
Payment and terms to meet your budget.
There is no financial lump sum to pay at the end of the agreement.
The loan is secured on the vehicle; so if you miss any payments the vehicle may be repossessed.