Hire Purchase is the traditional method of financing a vehicle with the vehicle becoming the property of the lessee at the end of the period. 

How does it work?

The monthly payment is determined by the amount of deposit paid, the period of the contract and the sale price of the vehicle.

The loan itself is secured against the car. This will make obtaining finance easier than trying for an unsecured loan. You should bear in mind that monthly repayments will be higher than they would be during a personal contract purchase and you will not own your vehicle until the last payment has been made. The loan provider could repossess your vehicle at any time if the payments are not kept up. In the event of the vehicle being sold before the end of the agreement you would still be required to pay the loan back in full.

Hire purchase - important points

There are some important points to keep in mind when considering hire purchase on a vehicle:

• Hire Purchase requires a deposit and the remaining outstanding balance will be paid in monthly installments over an agreed and set period of time.
• You will not own the car until the final payment has been made. In the event that you are unable to make the payments only the car, not your house or possessions can be repossessed. This is due to hire purchase being secured against the car only.
• The monthly payments may well be higher than they would be with other finance methods but it is likely that the overall sum of repayment will be lower.