Today, we will be taking a close look at HP car finance, which stands for Hire Purchase. This is one of four car finance methods recommended for customers, and it’s one that many deem to be very much worth considering if you’re planning to buy a vehicle. But what aspects should you be wary of, especially to avoid the possibility of being mis-sold HP car finance by someone who you may not realise is a less-than-trustworthy dealer?
The name Hire Purchase pretty much sums up what the plan is all about. A Hire Purchase is a finance plan that sees you pay an initial deposit (often around 10% of its entire value), and from there you will make monthly payments that could last for a number of years, up until the point where you have paid off the remaining cost of the vehicle. Up until then, you are only hiring the car, but once you have made the last payment, then you have total ownership of the vehicle; you have completed the purchase (hence the name Hire Purchase).
The benefits of those are that the monthly costs are not as high as they might be if you opt for another finance plan, because up until your last payment, the car is technically not yours. This also makes it easier to change course and enter a new plan, should an opportunity come up to do so that is agreeable to all. What’s more, once you’ve finished paying it, the car is officially yours, and you could potentially have the motor for another year, five years, ten years or longer without having to pay any excess, beyond the usual costs that come with owning a vehicle.
Where you should be careful is the amount that you are asked to pay in accordance with the market, and also the general condition of the car. Is the dealer being 100% honest when they assure you that the car is up to scratch, or has it outlived its usefulness from a functionality standpoint? Is the deposit payment, and the amount that you need to pay per month in general, fair to the market value of the car elsewhere? And don’t listen to the dealer when they try to rush you into an agreement (“We’ve only got one car left/our offer expires next week”), because this is usually for their benefit rather than yours.
Nevertheless, a Hire Purchase is as good a finance plan as any should you wish to buy a car, and you want more information contact us today.