Hire Purchase (HP)

This means you will be agreeing to hire the vehicle from the lender until you pay for the car. These types of agreements are usually longer in length and higher in monthly payments. This loan will be secured on the vehicle, and you will not own it fully until all payments have been completed.

With hire purchase, you can choose the amount of deposit you wish to put down. It’s important that your monthly payments will be affected by the amount of deposit you decide to put down. You will have the option throughout the agreement to settle the outstanding finance by requesting the settlement figure. Should payment be made in full after such a request the car would become legally yours.

Pros

• No mileage restrictions
• No balloon payment at the end of the agreement
• Fixed payments over a set period to allow you to budget easily
• When you’ve paid half of the total amount back you can request to opt for Voluntarily termination – which means you can hand the car back if you want to
• Early ettlement
• Thorough checks are carried out on who you are buying from to ensure they are reputable

Cons

• High monthly payments in comparison to other agreement types
• The loan is secured against the car and therefore you could have the vehicle repossessed if you fail to keep up with payments