Drivelease Hire Purchase

How Drivelease Hire Purchase works

Drivelease Hire Purchase combines elements of both a loan and a lease. You reach an agreement to pay an initial deposit, typically anything between 10% and 50%, and then pay off the balance in monthly instalments over an agreed period of time. At the end of this period, the car is yours.

 

Unlike a lease or a personal contract purchase agreement, the residual value of the vehicle is not taken into account. Instead your monthly payments on a hire purchase agreement are determined by the retail price of the vehicle, the size of the deposit and the length of the contract.

 

In effect, the contract is between you and the lender but is arranged by us as your broker. The lender effectively buys the vehicle and allows you to use it while you make payments. Only when all payments are complete is the car officially yours.

Advantages to Drivelease Hire Purchase

The main advantage of a hire purchase agreement is that you can buy a luxury, prestige or performance vehicle that you couldn’t otherwise afford at this moment in time.

 

Your monthly payments are effectively secured against your car – and this has both pros and cons. Positively, this means you’re more likely to secure finance than you would be by shopping around for an unsecured loan as the lender has some ‘security’ in the form of your car – this is often reflected in better interest rates.

 

It’s important to check out the APR to determine what the real cost of borrowing will be. Monthly payments will usually be higher than other forms of car finance, but in the long run the overall sum will usually be lower.

Important factors to Drivelease Hire Purchase

You must be sure you can keep up with payments or the funder will have the right to repossess the vehicle. Normally this will apply if you’ve paid less than a third of the agreement – if you’ve paid more than that it is usually necessary for the finance company to take you to court to either reclaim the vehicle or the remaining cash. For most however, this is a safer form of finance than a regular secured loan – which puts your house at jeopardy if you can’t meet repayments.

 

Reselling the vehicle during the hire purchase term can be complicated. You will still need to pay off the money you owe in full. Also watch out for early settlement fees and ‘option to purchase’ fees. These are not mandatory on hire purchase agreements but will be charged by some finance companies.

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