Now, I don’t know about you, but when people start talking about the different ways to purchase a new car, I get confused. There are a few different options that you can choose from. For example, Hire Purchase, or HP as it is more commonly known, is just one of the ways to get your hands on a new car. This is also one of the most popular ways of doing so.
Similar to Personal Contract Purchase, or PCP (yet another way to buy a new car), you do not actually own the vehicle until you have paid off the full amount of the Hire Purchase arrangement.
What is it?
A Hire Purchase (HP) agreement will see you pay an initial deposit and monthly payments thereafter. This will be over a pre-arranged period of time and you will be paying a portion of the money borrowed plus the interest.
At the end of the contract you will have the option to purchase the vehicle and in some cases you will have to pay a fee. All of the details will be stated to you at the start of the contract so you need to make sure that you know the details before signing anything.
Remember. This is your money and the car you will be driving. Don’t be confused by any jargon a salesman may use. If you are unsure of anything, ask!
You may now be wondering what the benefits of a Hire Purchase agreement are… Well let me tell you…
You know exactly what your outgoings will be on the car you are going to purchase each month. This means you can effectively budget how much it is going to cost you.
On completion of the contract (and assuming you have fully paid off the full balance) the car will be yours to keep and do what you like with.
There are no mileage restrictions with a Hire Purchase agreement. Meaning you don’t have to keep a close eye on what mileage you are doing to avoid a hefty bill at the end of the month/year.
Getting the Best Deal
There are a few things to remember when looking for the best deal on your hire purchase contract. These are things such as the retail price of the new vehicle, the APR/rate of finance available, the amount of deposit that you will be putting down on the vehicle and also the length of the HP agreement.
With these in consideration, I would recommend :
- Researching the vehicle that you are after. By being flexible with the vehicle that you want you can really find the best deal to suit you.
- Shop around. Ask if dealers have any offers for you, it may be that they have an abundance of a certain model that they have deals on at the moment. In which case you can get the new car at a fraction of the price you expected to pay.
- Don’t go looking at over-priced cars just because you won’t be paying for it all at once. You may still feel the pinch when the high monthly payments have to be made. Set a budget and stick to it.
- The APR/rate of finance should be competitive. Again, shop around and see if there is a better deal out there for you.
Askaprice.com which has great information on both Hire Purchase and PCP deals. Askaprice.com can also provide you with free, no obligation quotes on a wide range of new car deals.