Hire Purchase
Hire Purchase (HP)
Hire purchase or HP (abbreviated) is the legal term for a contract that is developed in the UK. In most cases hire purchase is when a consumer can’t afford to pay in a lump-sum for a particular item, and therefore has to pay in weekly or monthly installments.
When the time period for the monthly/weekly installments plus interest has been paid the item officially belongs to you. However, if the consumer defaults in paying the installments, the owner/company may reposes the particular good/s.
HP is a straightforward way to finance a new car
- HP is simply a loan secured against the car that you require
- There is no mileage contract
- Ideal if you wish to own the car at the end of the payment scheme
Hire purchase is not dissimilar to borrowing a lump sum of cash from a bank or lender and paying it back over a period of time, with interest.
How to lower your payments?
- Taking out hire-purchase over a longer period will significantly lower the cost you pay each month
- Initially putting down a deposit will also affect your monthly payments. The higher deposit you put down the lower the monthly payment.