Hire purchase car finance
Terms and Conditions:
This example is for a Hire Purchase Agreement.
I confirm that I have read and understand the following, and that in doing so provide permission for ZAP Loans to undertake a credit search and provide my information to their panel of lenders. I understand that this may register as a credit search against my name.
- I have read the Initial disclosure document (IDD) available online
- I consent to a credit search being conducted
- I understand the following
- The credit search relates to a hire purchase product which does not have any mileage restrictions; however, a balloon product is also available – please call to discuss
- Subject to balance financed, the agreement would be protected by the Consumer Credit Act (CCA)
- I tend to be the registered keeper of the vehicle and would hold fully comprehensive motor insurance during the length of the agreement
- I understand that the vehicle is at risk of repossession if the contractual repayments are not maintained
By proceeding to obtain a quote, you confirm that you have independently chosen the appropriate term of agreement , are comfortable with the suggested repayments and agree to the above statements. Copies of the relevant documentation, to include the IDD, Product Explanations and Overview have been provided to your email address in a durable medium
What are the pros and cons of a hire purchase?
You don’t need to find the money to pay a large lump sum payment at the end of the agreement.
Payments are fixed over the entire period – which enables you to budget more easily
With the finance agreed upfront – you’re in a better position to negotiate on the price of your vehicle.
Monthly payments are usually higher than for hire purchase agreements.
If you fail to meet your monthly repayments, the vehicle can be repossessed.
Failure to make regular repayments could also negatively impact your credit score.
How does hire purchase work?
Let’s say you want to buy a car listed for £12,000 through a hire purchase agreement lasting 4 years (48 months).
You put down a deposit of £1,000 and get offered an APR of 20.9% representative.
Your example breakdown might look a little something like this:
*Note: The APR you’re offered will be dependent on your credit rating and the lender you’re borrowing from.
| Car value | £12,000 |
|---|---|
| Deposit | £1000 |
| Amount to finance | £11,000 |
| APR | 20.9% |
| Total repayable | £15,823.57 |
| Term | 48 months |
| Monthly repayment | £329.66 |
| Car owned at the end of agreement? | Yes |
Frequently asked questions
What is a conditional sale?
A conditional sale (CS) agreement is the same as a Hire Purchase agreement, except that you will automatically own your car after the finance has been paid. Conditional sales may or may not include a balloon payment at the end of your agreement.
