Hire Purchase (HP) is a method of finance when purchasing consumer goods, typically, if you’re using HP for either a new or used car, in most cases, you’ll be required to put down a deposit of around 10% of the vehicle’s value. The balance is then paid off in monthly instalments, typically between 12 and 60 months.
Hire Purchase can be arranged by car dealerships or brokers the finance rates will vary depending on your credit score, along with the type of vehicle you’re purchasing, finance rates tend to be more competitive for new cars, but slightly higher for used or pre-owned vehicles.
Key Points.
- In a hire purchase agreement, ownership is not transferred to the purchaser until all payments are made.
- Hire purchase agreements usually prove to be more expensive in the long run than purchasing an item outright.
- Hire Purchase is a simple and straightforward way to pay for your car, particularly suitable for customers who wish to own their car over an extended period of time.
Citizen Advice Bureau explain a bit more about the process and your rights when buying any good using Hire Purchase. Please also get in touch with one of our expert team if you are unsure on how your vehicle is financed and how this would workwith Gap Insurance.