What is Hire Purchase? | Thame Cars

What is Hire Purchase?

How Hire Purchase (HP) Works

Hire Purchase is an established means of financing a used car purchase, and can be arranged through Thame Service Station. Unlike Personal Contract Hire (PCH), Hire Purchase spreads the cost of ownership over a set period so that you own the car at the end of the term.

As with a Personal Contract Plan, Hire Purchase offers a fixed interest rate so that you can be sure of the monthly cost of owning your new car and budget accordingly. However, unlike PCP, Hire Purchase doesn’t allow you to defer payment of a segment of the car’s value to the end of the agreement.

This means that your monthly payments will be higher as you will be required to pay off the full purchase price (plus any interest charges) over the term of the Hire Purchase agreement. However, you will own the car at the end of the term with no additional fees to pay and will be free to either keep it, sell it yourself or trade in in for a newer model.

It’s also worth bearing in mind that Hire Purchase is less flexible than a Personal Contract Plan in terms of the length of the agreement – the monthly payments and duration of the agreement is likely to be more rigid than a PCP solution which we can alter the deposit, duration of the plan and amend other factors to best suit your budget.

Benefits of Hire Purchase

Hire Purchase offers an alternative to Personal Contract Purchase for those looking for a more traditional car finance approach:

  •   Fixed monthly payments
  • A fixed interest rate for the duration of the agreement means that you can be sure of the amount you will pay each month.

  •  Ownership guaranteed
  • You will own the car outright at the end of the agreement, unlike with Personal Contract Hire.

  •  No balloon payment
  • Unlike a Personal Contract Plan, there is no balloon payment or additional fees to pay at the end of the agreement.

  •   Flexible deposit amounts
  • You can lower your monthly payments by placing a larger deposit at the start of your Hire Purchase agreement.

  •  No mileage limit
  • You aren’t subject to a mileage limit with an HP agreement, so you won’t need to pay additional costs if you exceed your expected annual mileage. 

    To discuss a quote for the car of your choice, get in touch with us today on: 01844 854148