What are the benefits of hire purchase?

What are the benefits of hire purchase?

The advantages of Hire Purchase over a personal loan are:

  1. Hire purchase is cheaper because the finance company retains ownership of the car until you make your final payment (i.e. it is secured).  If you are unable to keep up your monthly payments then they will simply take the vehicle back.
  2. Hire purchase is widely available from most dealers and manufacturers and it can be approved more quickly.
  3. The deposit on a hire purchase is likely to be lower.

 

The main advantage of hire purchase over PCP is that if the final ‘balloon payment’ is paid to acquire the car, then a hire purchase agreement would be cheaper overall.  However, you have to contend with larger monthly payments for the duration of the period.

Hire purchase is a better, cheaper, choice than PCH for long term car use (if you want to have the car more than 4 years) because at the end of the period you own the car.

Related FAQs

What is personal contract hire (PCH)?

What is PCP or Personal Contract Purchase?

What is a personal loan?

Comments are closed.