How to get the best hire purchase deal on a new car


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There are many different methods available to those looking to buy a new car, meaning more of us than ever before are driving flashy new wheels.

The number of new cars being registered on an annual basis in the UK has remained above two million every year since 2012, partly thanks to the many ways available to buy one.

HP, PCP, leasing – which is best for you? There are several factors that could push you towards a hire purchase deal.

What is hire purchase?

While personal contract purchase (PCP) deals are perfect for those who may only want a car in the medium, hire purchase suits those who are confident they will want to keep the car long-term.

After paying a deposit, you will then pay monthly for your car (with interest added onto the remaining value of the car) before a final payment and purchasing fee sees the car put in your name.

It is important to remember that, until this final stage, you will not own the car.

HP Example:

Car cost: £14,000
Deposit: £1,400
APR: 5% over three years
Payments: £378 per month for 36 months
Option to purchase fee: £200
Total spend: £15,208

What are the benefits of hire purchase

Hire purchase enables you to stretch out payments for a new car over time, perfect if you cannot raise the cash to pay outright for a new motor.

As you will not own the car until paying the option to purchase fee, it is easier to secure finance compared to those who take out a loan to pay for a car outright. Even if you have a bad credit score, you have a much higher chance of securing finance on a hire purchase basis.

Many dealerships will offer deposit contributions on hire purchase deals too, which could bring down your monthly repayments or allow you to put less down upfront.

How to get the best hire purchase deal

Most of us will get finance from the dealership where we purchase our new car from, although it is always worth comparing the deal you are offered in the showroom with providers online.

One benefit of buying from dealerships is the chance to haggle. Make sure you go into the negotiations with a clear idea of how much you can afford and see how far below budget you can push the store to.


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