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Hire Purchase Information
What Is Hire Purchase?
Hire Purchase is the traditional method of financing a vehicle with the vehicle becoming the property of the lessee at the end of the period like Contract Purchase, Lease Purchase and Personal Contract Purchase. The monthly payment is determined by the amount of deposit paid, the period of the contract and the sale price of the vehicle.
How Does Hire Purchase Work?
The loan itself is secured against the car or van. This will make obtaining finance easier than trying for an unsecured loan. This method of finance is normally overall cheaper than Personal Contract Purchase (PCP) Contract Purchase (CP) and Lease Purchase (LP) and can be obtained by simply e mailing sales@lease-hire.co.uk for a competitive quote.
How Is Hire Purchase Accounted For?
You should bear in mind that monthly repayments will be higher than they would be during a personal contract purchase, lease purchase or contract purchase and you will not own your vehicle until the last payment has been made. The loan provider could repossess your vehicle at any time if the payments are not kept up. In the event of the vehicle being sold before the end of the agreement you would still be required to pay the loan back in full.
Hire purchase - important points
There are some important points to keep in mind when considering hire purchase on a vehicle:
- Hire Purchase requires a deposit and the remaining outstanding balance will be paid in monthly instalments over an agreed and set period of time.
- You will not own the car or van until the final payment has been made. In the event that you are unable to make the payments only the car or van, not your house or possessions can be repossessed. This is due to hire purchase being secured against the car or van only.
- The monthly payments may well be higher than they would be with other finance methods but it is likely that the overall sum of repayment will be lower.
- Interest rates will vary from dealer to dealer, always ensure that you know the APR (Annual Percentage Rate) of the hire purchase agreement before signing any agreements.
