What is Hire Purchase?
Hire purchase is a way to finance buying a new or used car or van. You (usually) pay a deposit and pay off the value of the car in monthly instalments, with the loan secured against the vehicle. This means you don’t own it until the last payment is made.
How hire purchase works
In most situations, you first need to put down a deposit on the car you want to buy. This is usually 10% of the vehicle’s value.
The rest of the value of the car will then be paid off in instalments over a period of 12 to 60 months (one to five years).
Hire purchase is arranged by the car dealer, but brokers also offer this service. The rates are often very competitive for new cars, but less so for used cars.
The loan is secured against the car, which is why you can’t own it until you’ve made your last payment.
Make sure you understand the terms and conditions of your loan before signing the contract.
Getting the best hire purchase deals
You need a good credit rating to get hire purchase deals at the lowest interest rates and always check the total amount repayable when comparing hire purchase with other finance methods.
Pros of hire purchase
- Flexible repayment terms (from one to five years) to help fit in with your monthly budget – but the longer the term the more you’ll pay in interest.
- Relatively low deposit required (normally 10% of the car’s price).
- Fixed interest rates so you know exactly what you’re paying every month for the length of the term.
- Once you’ve paid half the cost of the car, you might be able to return it and not have to make any more payments.
Like what you see?
Interested in hire purchase for your next vehicle? Give us a call and we can explain the best options for your particular credit situation.
PHONE US ON
01254 771142 or 07770 988026
OR FILL OUT A VEHICLE ENQUIRY FORM