Hire purchase and what you need to know
Buying a car with hire purchase is one of the most easiest car finance plans that can help you get the car you want and the option to buy the car at the end of the hire purchase contract. Let’s dive deeper!
Hire purchase is one of the many car finance plans that can be used to buy a new or used car. A low deposit is paid and the remaining amount of the car is paid off in monthly installments, for the car loan. You can’t take ownership of the car, until the last payment is made.
Buying a car with hire purchase needs a good credit rating, which is required to get hire purchase deals at low interest rates, it is essential to check the total amount that needs to be paid while comparing hire purchase deals with other car finance methods.
In Hire Purchase, there is an initial deposit on the car that needs to be paid, which is 10% or more of the vehicle’s total value. The remaining value of the car will be paid off in installments over a period of 1 to 5 years.
To know more about hire purchase - here is the Hire Purchase ACT - 1964
A car dealer or a broker can arrange for buying a car with Hire purchase. For used cars, the annual percentage rate can vary from 4% – 8%. The lower the interest rate, the better. The rate could be higher if you don’t have a good credit score. Do understand all the terms and conditions of your hire purchase contract before signing.
Usually there is a final fee after all the installments have been paid, known as ‘Option to Purchase’, you can own the car once you’ve paid this. It could be around £150-£250, but it is better to ask since the amount could vary. Obtain an outstanding finance check to know more about your used car’s financial status.
Buying a car with hire purchase is not an easy thing to do and requires careful consideration into the details that follow. Let’s get to know some things first.
Buying a car with hire purchase is one of the car finance methods to buy a car, if you are buying a used car that has an existing finance plan, then you should avoid that car, or talk with the concerned owner to make a deal and compensate with a discount. Get a vehicle history report to check if a car has outstanding finance before buying a used car and make an informed purchase.