Should You Consider Hire Purchase?
With most car buyers turning to PCP to help fund their cars, is it worth considering a HP finance offer for your next car? Here, we look at the benefits that hire purchase can afford you…
You Can Have A Higher Spec Car
Because the payments are repaid monthly over a longer period and often don’t require a large deposit (if any), you are able to afford a better car compared to one that you could afford outright.
No Increase Of Repayment Rates
You and the lender agree the cost of monthly repayments and these will never, ever rise, even if bank interest rates do. It allows you to plan and stick to a monthly budget without fear of a sudden increase.
No Balloon Payment
Many people are put off from hire purchase because the monthly costs are higher compared to a PCP agreement. The reason for this is that with hire purchase, the car legally becomes yours once you have made the final monthly payment. If you are looking to buy a car on finance that you are certain you will want to own at the end, then it may be worth considering HP over PCP, as PCP will include a “balloon payment” at the end of your repayment term. That means that to own the car, you will need to cough up the remaining unpaid cost (usually a few thousand pounds!).
What Are The Drawbacks?
As with anything, you must weigh up the pros and cons of HP before committing yourself to the repayments. One major drawback is that the car is never legally yours until you have completed the final purchase and can be repossessed if monthly payments are not met. This will also negatively affect your credit score. Therefore, it is essential that you can afford the higher monthly repayments over the long term.
If you are considering buying a vehicle and need any help with car finance in London, contact the expert team at Stephen James where we will be happy to help.