Hire Purchase or HP allows you to budget your payments more accurately due to its fixed deposit and fixed interest rate. The deposit and term can easily be adjusted to suit your needs allowing you to find the perfect monthly payment for you. You get full ownership at the end of the agreement and can settle the contract at anytime without penalties.
1. How does Hire Purchase work?
With hire purchase deals, you hire the car and pay an agreed amount in regular instalments. You are not able to sell or dispose of the car without the lender’s permission until the full amount has been paid.
2. How does Hire Purchase differ from leasing?
Hire Purchase terms can typically run for longer than a lease agreement. They can also optionally give you the chance to own the vehicle, whereas a lease car must be returned at the end.
3. Does Hire Purchase include insurance?
Your car insurance is separate to your finance agreement.
4. Does Hire Purchase affect my credit rating?
Yes – it can do so both positively and negatively. Making payments on time and fulfilling your obligations should improve your rating. Your credit score could be damaged by missing payments or defaulting.
5. Is there interest on Hire Purchase?
Yes, and this is fixed for the duration of the agreement.
6. Is there PPI on Hire Purchase?
Following a ruling by the High Court, PPI is not widely available. It is not added to your Hire Purchase agreement automatically.
7. Does Hire Purchase require a credit check?
Yes – you will need a good credit rating to receive more favourable car finance terms.
8. Can Hire Purchase be transferred?
Hire Purchase is a type of finance agreement which cannot be transferred to a new vehicle or owner. If changing your model on finance, you will need to arrange a new Hire Purchase agreement.
9. Can I get a Hire Purchase agreement with bad credit?
You will need to discuss your credit situation with a specialist lender – the list at the link provided is approved by the Finance & Leasing Association.
10. When can I terminate a Hire Purchase agreement?
Car finance can only be cancelled within the first 14 days of the agreement.
11. How can the Hire Purchase contract be terminated?
You must give notice to the finance company within the first 14 days of the car finance agreement. It’s important to remember that this only cancels your Hire Purchase and does not affect your obligation to purchase the vehicle.
12. Can you sell a car on Hire Purchase?
Yes. The car can only be sold once all payments on the agreement have been made.
13. How does commercial Hire Purchase work?
Hire Purchase is just as easy to arrange on company cars and commercial vehicles, with very similar finance plans and terms. Speak with your nearest car dealership – such as Advance Vauxhall – to explore these options.