Car Finance Centre

Hire purchase is a fixed monthly cost with a fixed loan period ideal for consumers wanting a fixed budget. The user is effectively the owner of the vehicle, but title does not pass until the car loan is fully repaid.

As it constitutes a loan, monthly payments do not carry V.A.T. The client has cancellation rights at the halfway point in the agreement. Hire Purchase is available on cars up to 10 years old.

When a sum equal to the original full price plus interest has been paid in equal installments, the buyer may then exercise an option to buy the goods at a predetermined price (usually a nominal sum) or return the goods to the owner. In the United States, a hire purchase is termed an installment plan; other analogous practices are described as closed-end leasing or rent to own.

Hire purchase differs from a mortgage and similar forms of lien-secured credit in that the so-called buyer who has the use of the goods is not the legal owner during the term of the hire-purchase contract. If the buyer defaults in paying the installments, the owner may repossess the goods, a vendor protection not available with unsecured-consumer-credit systems.

HP is frequently advantageous to consumers because it spreads the cost of expensive items over an extended time period.

Business consumers may find the different balance sheet and taxation treatment of hire-purchased goods beneficial to their taxable income. The need for HP is reduced when consumers have collateral or other forms of credit readily available.

 Apply for Car Finance
 Get your FREE Experian Credit Report