/The Benefits of Hire Purchase when Buying a Car

The Benefits of Hire Purchase when Buying a Car

money for car 730x487 at The Benefits of Hire Purchase when Buying a Car

Hire purchase is one of the popular ways to finance a new or approved used car. If you currently do not have the necessary funds, a hire purchase agreement allows you to get a car, and spread the cost in a manner that suits your budget.

As with other forms of financing, it is imperative to weigh up both the ups and downs before signing the contract to ensure you are making an informed decision. In this read, are going to look at the various benefits of car hire purchase finance agreement:

  1. Spread the Cost

A car, whether new or used is often an expensive endeavor and not everyone has a lump sum of cash to make the purchase. However, a HP agreement allows for spreading the costs over time, making the purchase more affordable.

  1. Reduce Repayments to Match Your Budget

Usually, the costlier the car, the higher the repayments. However, there are a few ways you can minimize the repayments. First, making a bigger deposit reduces the overall amount and interest required as repayment. Second, you get flexible repayment terms, usually 1 to 5 years. This means you can also reduce the monthly repayment amount by picking a longer term.

  1. Fixed Monthly Payments

When you pick a HP agreement, the interest rate is fixed from the time you sign the contract. This means you will pay the same amount every month, and thus easier to fit within your budget.

  1. Get a Newer, Higher Spec Vehicle

With a HP agreement, you have the option to go for a higher-spec car that may have been previously out of your reach financially. Even though you have to pay back the full amount over a certain period, you get to drive it right away.

  1. Own the Vehicle at the End of the Agreement

Once you make the final payment, the car ownership will be instantly transferred to you. This is unlike a lease deal where you never own the vehicle or a personal contract purchase agreement where you need to make a final lump sum payment in order to buy the car. However, with a hire purchase agreement, once you have made all your payments, you will have full ownership of the vehicle with no more obligation.

  1. Pay it Off Early in Most Situations

Most HP agreements allow you to pay off your finance earlier. This is unlike other forms of financing that will only let you do such after a certain number of repayments. With a HP deal, you can settle your payments either fully or partially before the end of the agreement term according to Mrcarmats.

  1. Fewer Restrictions

While some financing and leasing options come with conditional or mileage restrictions, HP does not as the vehicle is meant to be yours after you complete the repayments.

However, it is paramount to keep in mind that until you have fully repaid the car, it does not legally belong to you and so, you’ll want to go through the contract carefully before making any modifications.

  1. Get Approved With Less than Desirable Credit

HP is popular as it’s the easiest form of car financing to get approval. So, if you are worried about your credit rating, the hire purchase might be the best option.

(CEO / Editor / Journalist) – Bruno is the owner and CEO of Motorward.com; he’s responsible for the entire team, editorial guidelines and publishing. Bruno has many years of experience in the auto industry, both managing automotive websites and contributing to the press.