Hire Purchase (HP) is a finance product that allows you to budget accurately thanks to fixed interest rates and monthly payments. With HP you are effectively hiring the car until the end of your agreement, when with your final payment you purchase it and the car becomes yours.
HP deals can be tailored to your requirements by simply adjusting the length of your agreement (usually from 1 to 5 years) and the amount you pay as an initial deposit. Typically, a deposit will be around 10% of the total value of the car; however, a 0% deposit may be an option.
What is HP?
- Fixed Interest Rate
- Deposit and term can be adjusted to find the monthly payment that suits you
- The finance is against the vehicle
- Other forms of credit will remain available for future use
- Agreement can be settled at anytime
- At the end of the agreement you have full ownership of the vehicle
With HP financing your new vehicle acts as the security for the finance arrangement, ensuring that any other lines of credit that you may wish to take advantage of remain open to you. Because of the flexibility of Hire Purchase, you are able to settle your agreement at any time, without financial penalty. You could also upgrade before the original arrangement is complete and a new payment plan will be organised for your new vehicle.
Benefits of Hire Purchase
- It enables you to purchase a more expensive car than if your deposit alone was used
- It is simple to understand and arrange
- The finance agreement is flexible and can be ended at any point
- At the end of your agreement you own the car outright
- It is easier to get approved on, especially if you have a poor credit score
- The car acts as security so you are not closed off from other forms of finance