Affordable monthly car finance payments
Affordable Hire Purchase Finance Deals with Carbase
If you want to buy and own your car at the end of the finance deal with no balloon payments, a HP finance contract may be right up your street. With a range of affordable monthly payments our finance team will help you get the car you want at a price you can afford.
Our sales team will help you identify which monthly payments you can afford and help you find the car that suits your budget. Our responsible and tailored used car service ensures you get the right car and a price you can afford.
What is Hire Purchase?
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.
Hire Purchase facts
- 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
How does hire purchase work?
When you first decide to buy a car on hire purchase, you will have to place down a deposit on the vehicle. This is usually around 10% of the total price. At Carbase, we allow you to set your own deposit so, whatever you're able to contribute is taken off the total value of your chosen vehicle.
Hire purchase is normally offered by a car dealer, such as Carbase, with the competitive car loan rates being provided by a finance company based on your credit score and/or personal circumstances. The loan that you take out on the car, which you pay back over a set time frame, is secured against the car. This means that you will not own the car outright until you have paid the last instalment of your loan.
It's important to make sure you budget for these loan monthly repayments, since you don't want to stretch your monthly budget. Also, should you miss repayments of your hire purchase loan, it can ultimately result in the loss of your car.
Your hire purchase agreement will set out the period of time you have for repayments, and the amount of monthly instalments that you will need to pay back, with interest, every month. With us, your agreed time period can be anything from 1 to 5 years.
Will bad credit affect your ability to buy a car on Hire Purchase?
If you're looking to buy a car but have bad credit, purchasing a car on HP car finance can be an accessible option. While Hire Purchase repayments are often more expensive than those of another finance options, such as car leasing, the benefits of buying a car on Hire Purchase mean that you will eventually own the car and, if you make your repayments in a timely manner, you can work to improve your credit score.
If you're looking to improve your credit score before buying a car on Hire Purchase, or another finance option, why not take a look at our blog on the subject?
What are the advantages of Hire Purchase?
If you're not able to afford to buy a car in one big purchase, Hire Purchase can help fit the costs of buying a car around a monthly spending budget. With flexible repayment terms, you'll be able to pay as much as you can afford.
Of course, longer repayment terms will result in higher interest paid overall. However, even with a longer repayment term, the interest rates on your Hire Purchase agreement will be the same, so you'll know exactly how much you need to pay every month without any surprises.
When it comes to paying a deposit at the start of the process, as we mentioned above, it will most likely be quite low. Additionally, in some cases, once you've paid half the cost of your car, you may be able to return it and not have to make any more payments.
What are the disadvantages of Hire Purchase?
As we mentioned before, until you make your final payment, you don't own the vehicle. The deposit you put down, and the term length you choose, will also affect these payments. If you have a short term on the loan and your deposit is smaller, your loan repayments will often be higher than if you have a longer term and pay more of a deposit.
Until you have paid a third of the total amount of the vehicle, the lender is able to repossess the car without needing to get a court order.
Don't forget, HP is not your only option when it comes to owning a car. PCP finance may suit you better, find out more about it here.
How does my credit history affect the interest rate?
Carbase is a credit broker, not a lender, and is authorised and regulated by the Financial Conduct Authority. The interest rate is fixed for the term of the agreement and is determined subject to status by your credit score. HP Deals are available from 6.9% representative APR.
No matter your credit history, you can compare finance deals from a panel of lenders using your credit rating. Carry out a Free Car Finance Check, which uses a quotation search to show your likelihood of acceptance without affecting your credit rating. It is quick and easy to apply online once you have found your ideal car.