Many consumers love the option of hiring purchase. Hire purchase is a trusted option for car financing in the UK. This allows you to spread out the cost of your car over several years and make monthly payments. There are many car financing options available in the UK, but hiring purchase might be the right one for you. Let’s look at the advantages of hiring a car for hire purchase, and why it is so popular.
What’s a Hire Purchase?
You can finance a car by using hire purchases. You will usually pay a 10% deposit and then make monthly payments according to the agreed terms with additional interest. Most hire purchase agreements can be paid off in between one and five years. This secured loan means the loan is secured against the vehicle and you will not own it until all payments are made. Hire purchase spreads out the cost of the vehicle, unlike Personal Contract Purchase, which only covers a portion of it. Hire Purchase is more affordable than the Salary Sacrifice Car Scheme.
The benefits of hiring
1. Spread the cost
The best thing about hiring a car for hire is its affordability. You can often get a car for less than you initially thought. This is because you have the option to spread out the cost. The agreement will not change your monthly payments because they are fixed. Although you can obtain a rental purchase without deposit, a deposit can help increase your chances of approval and lower your monthly payment. Your monthly payments will be affected if you choose a shorter or longer finance term. A shorter term will increase your monthly payment but can also reduce interest rates and help you rebuild your finances.
2. Take the car to the finish
The car will be owned by the finance lender during the agreement. After the final payment is made, ownership of the vehicle will pass to you. Once the final payment has been made, the vehicle will be yours and the contract for car financing is over. You can use the car’s value to exchange for a new car on finance. It is important to note that the lender can take the car from you if your payments are not made on time.
3. Bad credit considered
Your credit score will determine whether you are approved for car financing. Low credit scores can be eligible for hire purchase agreements. A car finance bad credit decision is possible, but there are many ways to help you get accepted. Consider raising your credit score before applying for car finance. This could help you to get a better rate. You can also save money for a deposit and apply with a partner.
4. Other options are less restrictive than others
There are often mileage and conditional restrictions when you lease a car, or purchase a car under a PCP agreement. PCP cars are typically returned to the lender. They must be in good condition and adhere to the mileage limits. Additional charges may apply if you fail to do so. There are no conditional or mileage charges for hire purchase. You can’t make any modifications to your car until you have the agreement in place.
5. Partner with you
You might consider applying for joint car financing if you have difficulty getting approved for finance. A partner can finance your car for you. There are many advantages to this. This happens when two people apply to finance the same vehicle. A couple or two members of a family would typically own the car and be responsible for the repayments. This increases the likelihood of lenders approving your loan. This is a popular alternative to a car loan that has a guarantor.
