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4 Min read
What is Hire Purchase?
HP can be an excellent choice for those seeking full vehicle ownership at the end of the agreement, but it is important to note that you do not own the vehicle until the final payment is made.
Benefits of Hire Purchase:
✅ Full Ownership: Achieve complete ownership of your car once all payments are made.
✅ Equity Building: Build strong equity in the vehicle over the term.
✅ Available for All Assets: Whether it’s a family car, a luxury vehicle, or a commercial asset, HP is versatile and accessible.
✅ Cost-Effective: While HP may have higher monthly payments, it is the cheapest overall way to finance a car in the long run.
Drawbacks of Hire Purchase:
❎ Higher Monthly Costs: HP tends to have the highest monthly payments compared to other finance options, despite being cheaper in the long-run.
❎ Greater Depreciation Risk: HP has a greater exposure to depreciation compared to PCP, which typically offers a guaranteed future value (GFV) that shields against unexpected value loss.
Why Use Charles & Dean?
Using a broker offers several advantages when navigating Hire Purchase agreements:
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Competitive Rates: We have access to a wide variety of lenders, allowing us to find the most competitive rates available.
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Tailored Solutions: We can match you with lenders that offer the best payment options tailored to your specific needs.
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Market Expertise: We can cross-reference the market, ensuring you get a deal that best suits your financial situation based on rates and overall product suitability.
FAQs
Q: Can I settle a HP agreement early?
A: Yes, you can settle the remaining balance, known as the settlement figure, at any point during the agreement to take ownership of the car.
A: HP offers full ownership of the car at the end of the term with fixed monthly payments, whereas PCP usually requires a final balloon payment to own the car.
Q: Should I choose a HP agreement over PCP?
A: It depends on your monthly budget and whether you plan to own the car outright. Monthly payments on a HP are usually higher because they cover the entire cost of the car, and there is no final balloon payment. Once you make the final payment, you own the car. With a PCP, there is a balloon payment at the end that you must pay or refinance to take ownership of the car.
Q: Are there mileage restrictions with HP?
A: No, unlike PCP, there are typically no mileage restrictions with a HP agreement.
*Based on ten recent vehicle purchases with C&D’s APR Representative at 8.1%, versus dealer rates averaging 12.59% APR. Customers saved on average £5,342.28 on a finance advance averaging £39,390.20 Based on a 4-year PCP with a 57.97% balloon and vehicles up to 5 years old. We are a credit broker, not a lender. Credit subject to status, 18+, T&C's apply.
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