Our Hire Purchase Car Finance (HP)Hire Purchase Explained
“HP” is short for Hire Purchase, It is the simplest way to purchase a car on Finance. HP has both elements of a lease and a loan, and is the most common form of car finance in the UK for Used Cars.
How does our Hire Purchase Car Finance “HP” product work?
Once you have applied online or spoken to us on the phone, we will then arrange you a finance approval through one of our finance lenders. The balance of the car loan is then paid off over the agreed loan period in equal & regular, monthly installments.
For example if you purchase a car on Hire Purchase Car Finance over a term of 36 months, you are, in effect, “hiring” the use of the car for the first 35 months Installments & purchase it on the final 36 months Installment.
During the Hire Purchase agreement the vehicle will be owned by the Finance Company, and you will own a part of the vehicle increasing over time as you make the repayments. You are however able to sell the car privately while you are still making finance repayments on it. You will need to ask the finance lender for a settlement on the hire purchase car finance agreement and repay the lender once the vehicle has been sold.
How is Hire Purchase Car Finance different to other car loans?
A Hire Purchase car finance agreement isn’t the same as other forms car loans. A personal contract purchase (PCP) deal, for example. uses the vehicles residual value in order to calculating monthly repayments.
RightDrive’s Hire Purchase agreement’s are monthly payments are calculated by the sale price of the vehicle, any deposit you have put into the deal, any fees due and the term of the agreement.
Why do we use Hire Purchase for our Car Finance Deals?
Hire purchase is the typical loan type for car finance lenders who specialise in approving customers with a “Bad” or “poor” Credit history. This is because the money lent to the customer is secured against the vehicle unlike a loan or credit card.