Hire Purchase
Learn more about Hire Purchase finance.
Rates from 9.9% APR. Representative Example: Hire Purchase agreement, based on a vehicle with a cash price of £8,000.00, with £0 deposit, borrowing £8,000.00 over 5-years with a representative APR of 25.4% fixed, the amount payable would be £224.83 per month, with an option to purchase fee of £10.00, a total cost of credit of £5,489.80, and a total amount repayable of £13,489.80. Jigsaw Finance Limited t/a My Car Funder is a credit broker, not a lender.
About HP (Hire Purchase)
A Hire Purchase is a hiring agreement between you and the finance company.
Here's how it works: You agree to pay a fixed amount each month, including interest, for a period of 1 to 5 years. The car is used as security for the loan during this time.
At the end of the agreement, if you've paid off the full balance, you can own the car by paying an extra fee called the Option to Purchase Fee. Once you've done this, you become the legal owner, and the car title is yours.
Throughout the agreement, even though you're the one driving and taking care of the car, the finance company is the legal owner until you've fully repaid the borrowed amount.
Advantages
It's adaptable – you can choose terms from 1 to 5 years, but remember, the longer you take, the more interest you'll pay.
After you've made all the payments, including the option to purchase fee, the car becomes yours.
Hire Purchase can be more accessible for people with not-so-great credit histories, as the car secures the loan. This makes it easier to get compared to a regular loan without collateral.
Disadvantages
Monthly payments are more expensive compared to Personal Contract Purchase and Leasing agreements.
You only become the owner of the car when you complete the final payment.
During the contract period, you can't sell or modify the car without getting permission from the finance company.
If you fail to keep up all your payments, the finance company can repossess the car.