Hire Purchase, or HP, is one of the most common types of funding used to purchase a vehicle. It is usually based on a fixed length of time and secured to the purchase of the vehicle. You own the vehicle once all the regular payments and the Option to Purchase fee are paid.
Here are some positives for Hire Purchase and some things to remember:
- You will have full freedom with your mileage! Unlike PCH or PCP, you will not need to estimate your mileage at the beginning of the agreement. Avoiding those excess mileage fees!
- Once you have made your final payment (as well as the option to purchase fee) you will have full ownership of the vehicle. You could own the car that you may not have be able to buy outright!
- You cannot sell the vehicle without settling the finance.
- You will not own the vehicle until you have made all of the repayments necessary.
- You need to keep the vehicle insured correctly, maintained properly and in your possession until the full value of the car has been paid off.
- The monthly payments can be more expensive then the payments for other finance options, for example PCP, this is because you pay off the full value of your chosen car.
So, is Hire Purchase the right option for you? Hire Purchase is perfect for those wanting to purchase a car or van but cannot afford to buy it outright. It is also great for those who have high usage, as the mileage is not monitored.