Car financing for Newbies - The Hire Purchase Agreement

Let’s find out more about the Hire Purchase Agreement for financing your new car.

How it works - The lender buys the car and lets you “hire” it from them. But with the added benefit of ownership once you have made sufficient payments to the lender. You can adjust the payment terms according to your preferred tenure and work with the lender to find a monthly instalment amount that meets your needs.

Pros - Since the lender owns the car until you’ve paid up, they are much more willing to give you better interest rates and accept the agreement at a lower deposit amount. Sales tax and VAT can be waived and can benefit businesses in terms of managing their cash flow. Ownership is also granted at the end of the term.

Cons - If you default on payments or break contract anywhere in between, you lose the right to own even a portion of the car despite how many payments you’ve made.

Car financing for Newbies - The Hire Purchase Agreement

Find out more about the Hire Purchase Agreement with The Smarter Finance Company!