Hire purchase is a way of buying a car on finance, where the loan is secured against the car. You’ll need to pay a deposit of around 10%, then make fixed monthly payments over an agreed time period.
This means you don’t own it until the last payment has been made. So if you miss payments, you could lose the car.
Hire purchase agreements are usually arranged by the car dealer. This means they’re convenient to arrange and can be very competitive for new cars, but less so for used ones.
Rates are best for new cars, so check what you’ll be paying if you’re buying a used car.
When you’ve paid half the cost of the car, you might be able to return it and not have to make any more payments – check your contract to see if this applies to you. The car will need to be in good condition too, or you might be charged for repair costs.
When you’ve paid a third of the total amount you owe, your lender can’t repossess your vehicle without a court order.