19 May 2023
By Joy Pearson
Are you in the market for a new car, but your bank account isn't exactly revving up to speed... then you might want to consider Hire purchase as a financing option. With Hire Purchase, you can drive away with your dream car and pay for it in manageable instalments. In today's post, we will look into what Hire Purchase is and why it has become one of the most popular financing options to date, as well as how it's helped people like me and you able to get into the car of our dreams.
Before we start going into any detail, we should start of with the basics. Like what is Hire Purchase? Simply, it's like renting a car, but with the option to buy it at the end of the lease/finance period. The financine company essentially purchases the car for you and you pay them back over time, typically over two to five years. Making it easier to manage your finances.
One of the great things about Hire Purchase is that you don't need to come up with a huge lump sum of cash in order to get behind the wheel. You just need to make an initial deposit, if required, which is normally around 10% of the car's value, and then you go on to make regular payments until the end of the agreement. This is particularly useful for people who need a car for work of family commitments, but may not have the funds available to purchase one outright. By spreading the cost over time, Hire Purchase makes it possible for people to drive the car they want, without having to compromise on their budget.
Hire Purchase is a straightforward and easy process. Unlike other forms of financing, such as leasing, Hire Purchase doesn't require a large upfront deposit or a balloon payment at the end of the agreement. This means that the monthly payments are often lower than other forms of car finance, making it a more affordable option for many people.
But with any financial agreement, there are some things to consider. For instance, you won't actually own the car until you've made the final payment. This means that you can't sell the car without the finance company's permission until you've paid of the full amount. If you go on to miss payments, this could negatively impact your credit score and even result in the car being repossessed.
It is also worth noting that, when you opt for Hire Purchase, the finance company will charge you interest on the amount you borrow. This interest rate can vary depending on the finance company and your credit score. Therefore, it is important to research and shop around for the best deal available to you. By taking the time to research and find the best deal, you can ensure that you get the car you want while still being able to afford the monthly payments. Additionally, by comparing interest rates and loan terms, you can save yourself money over the course of your loan.
It's important to remember that defaulting on your payments can have serious consequences, such as the car being repossessed by the finance company. So, it's crucial to make sure that you can comfortably afford the monthly payments before committing to any finance agreement.
Overall, Hire Purchase is a popular car financing option because it provides an accessible way for people to purchase a car they may not have been able to afford upfront. By spreading the cost over a period of time, Hire Purchase makes it possible for people to get behind the wheel of the car of their dreams, without having to wait for compromise on their budget.