A finance deal to spread car payments over time. You hire the vehicle before owning it fully with a final payment.
Hire Purchase (HP) is a car financing option that is commonly used by UK drivers. It is a type of loan agreement where you can purchase a vehicle by paying in instalments over a fixed period of time.
With Hire Purchase, you typically make an initial deposit, followed by monthly payments, until the full cost of the car is paid off. Unlike other financing options, such as personal loans or leasing, with HP, you actually own the vehicle once the final payment is made.
This method allows you to spread the cost of the car over a longer period, making it more affordable for many drivers. The interest rate is usually fixed, which means your monthly payments will remain the same throughout the agreement, making it easier to budget for.
It's worth noting that until the final payment is made, the finance company technically owns the car. This means you cannot sell or modify the vehicle without their permission. However, once the agreement is completed, you become the legal owner of the car.
Hire Purchase is a popular choice among UK drivers who prefer to own their vehicles but need a more manageable way to pay for them. It provides flexibility in terms of the deposit amount, repayment period, and the ability to settle the agreement early if desired.