When it comes to leasing your next car, there are plenty of options to consider. For instance, you may want to arrange a Personal Contract Purchase, Personal Contract Hire, or even a balloon payment. However, when it comes to simplicity, a Hire Purchase contract is by far the popular choice among motorists. Often shortened to just HP, Hire Purchase is available for both business and personal users. You’ll arrange a finance plan, which includes making an initial deposit on the vehicle. After this, you’ll pay monthly instalments for a set period of time. This could be anywhere between 24 and 60 months.
With any form of Hire Purchase, it’s important to have a satisfactory credit history to your name. All offers made are subject to a credit check from an external agency, such as Experian. Therefore, it’s always wise to check your credit history before making an application for leasing.
With Hire Purchase agreements, you’ll first need to make a down payment (deposit). This can be three to six months’ worth of monthly instalments or a deposit up to 10% of the vehicle’s value. Once this initial payment has been made, you’ll have access to the vehicle and will start paying your monthly fee. This can be anywhere from 12 to 60 months. The vehicle doesn’t belong to you over this time, with you effectively renting its use. At the end of the Hire Purchase contract, you can make a final balloon payment to own the vehicle, but this is no obligation unless you’ve previously agreed to. With HP you can also benefit from excellent interest rates, especially on new vehicles – making the whole process worthwhile for those considering a motor. For used cars, you’ll often find interest rates less competitive. Throughout the contract, the loan is secured against the vehicle – so failure to pay will result in its repossession. Ensure to read through the full terms and conditions before signing the dotted line.
The benefits of a Hire Purchase:
There are a number of incredible benefits for choosing a Hire Purchase contract. This includes: