Being Responsible Without Fully Committing - Looking Into the Options Available With A Hire Purchase
For those who do not have the ability to make large down payments, finding an auto-mobile can be a daunting process. Faced with the options of either having pristine credit or a huge down payment versus purchasing a used car at a higher interest rate, you may feel that your exact needs are not met by either of these options. Fortunately, one of the most often used car finance options, a hire purchase contract, can assist in getting you new, reliable transportation that can ultimately become your own vehicle. We will discuss the advantages and disadvantages of using this form of finance on your next car.
What Is A Hire Purchase Contract?
A hire contract purchase allows an individual to essentially lease the car for a set period of time, with the option to purchase the car at the end of the contract. Unlike other agreements, the payments are not prorated and you are responsible for the maintenance and upkeep of the car. You do not possess technical ownership of the car unless you agree to purchase the car at the end of the contract and pay the option to purchase fee (nominal). You can also choose to walk away from the vehicle at the end of the contract without any obligations.
Advantages to A Hire Purchase Contract
For starters, it may be easier to obtain a hire purchase contract than other forms of car finance. The motor company approves the loan and the dealer then pays the company, giving more leeway than when working with a bank solely. The amount you need to pay upfront (deposit) is usually around 10% of the agreed upon rate, making it a cheaper solution that purchasing a new car with less than perfect credit. The terms involved with a hire purchase contract can be flexible, ranging from one to six years. You will also enjoy relatively low interest rates that can be competitive with prime market rates for personal auto loans.
Disadvantages to A Hire Purchase Contract
One of the biggest drawbacks to a hire purchase contract is the fact that you do not actually own the vehicle. The title will remain in the name of the finance company, and you are designed as the registered keeper of the car. When using a short-term hire purchase agreement, the payments may be much higher than with a traditional loan, so this is normally an option used for periods of 3-6 years. There are also the fees associated with the loan; the option to purchase fee is but one fee that you will encounter should you choose to keep the auto-mobile
What Is A Hire Purchase Contract?
A hire contract purchase allows an individual to essentially lease the car for a set period of time, with the option to purchase the car at the end of the contract. Unlike other agreements, the payments are not prorated and you are responsible for the maintenance and upkeep of the car. You do not possess technical ownership of the car unless you agree to purchase the car at the end of the contract and pay the option to purchase fee (nominal). You can also choose to walk away from the vehicle at the end of the contract without any obligations.
Advantages to A Hire Purchase Contract
For starters, it may be easier to obtain a hire purchase contract than other forms of car finance. The motor company approves the loan and the dealer then pays the company, giving more leeway than when working with a bank solely. The amount you need to pay upfront (deposit) is usually around 10% of the agreed upon rate, making it a cheaper solution that purchasing a new car with less than perfect credit. The terms involved with a hire purchase contract can be flexible, ranging from one to six years. You will also enjoy relatively low interest rates that can be competitive with prime market rates for personal auto loans.
Disadvantages to A Hire Purchase Contract
One of the biggest drawbacks to a hire purchase contract is the fact that you do not actually own the vehicle. The title will remain in the name of the finance company, and you are designed as the registered keeper of the car. When using a short-term hire purchase agreement, the payments may be much higher than with a traditional loan, so this is normally an option used for periods of 3-6 years. There are also the fees associated with the loan; the option to purchase fee is but one fee that you will encounter should you choose to keep the auto-mobile
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