Hire Purchase (HP) is a hiring agreement between you and the finance company.
The loan is secured against the vehicle over a set period between 1 and 5 years, with fixed monthly repayments including interest.
During or at the end of agreement (if the balance has been paid in full), you have the option to own the vehicle by paying an additional sum called the Option to Purchase Fee, you will then own the title to the car and become the legal owner.
You are the registered keeper of the car and responsible for insuring and maintaining it, but the finance company remains the legal owner until the amount you borrowed has been fully repaid.
|Initial Payment / Deposit||You may be asked to pay an initial payment / deposit.|
|Fees||There is usually an arrangement fee charged by the lender and any fees can be included as part of the regular repayments.|
|Restrictions||There are no mileage restrictions under a HP agreement. Lenders may impose certain restrictions on the use and location of the vehicle.|
|Ending the Agreement||You can make an early repayment to your finance provider before the end of the agreement. At the end of the agreement or once all repayments have been made including the option to purchase fee, title to the vehicle passes to you.|