Pros and Cons of Hire Purchase Agreements:

Let's have a dive into the pro’s and cons of Hire purchase…

This article takes a deep dive into the world of HP with the view of giving you insights into some of the positives and negatives around using HP as an option for financing your car! 

Make sure you check out our blog post ‘an introduction to car finance’ before reading this article as it gives you a broad overview of your options. 

Let's Kick off with the negatives… 

• Repayments will include interest charges, and the car will overall cost more than a cash purchase
• The finance company are the legal owners of the vehicle until the agreement is paid in full.
• Non-payment can negatively affect your credit rating.

Moving on to the Positives...

• Customers can have a newer, higher specification car than they could/want to buy outright. Meaning that you can have access to your dream car today! 
• The cost is spread over a period of time and paid by fixed monthly instalments that will not increase – even if bank interest rates rise.
• The cost of the vehicle is paid by monthly instalments rather than a large upfront investment.
• You own the vehicle once your final instalment has been paid, compared to leasing (renting) the vehicle.
• There is no VAT to pay on monthly instalments, unlike that on a lease.
• Above all, make sure that you take your time to read the finance agreement and ask questions if you need any clarification!