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Like everything, there are pros & cons of using hire purchase (HP) to buy a new car. So if you’re in the market for a new vehicle and are considering it as a car finance option, we’ve broken down few of the key advantages / disadvantages of choosing this option:

Pros of Hire Purchase

  • You can access newer, higher specification cars. …
  • You can spread the cost over a fixed term. …
  • The interest rate is fixed. …
  • You’ll own the car at the end of the agreement. …
  • Option to pay off the loan early. …
  • There are fewer restrictions.

Weigh up the Pro's and Con's to decide if HP is right for you when buying a car

EmanFinancial Adviser, OnestopSave

Cons of Hire Purchase 

  • No ownership before the end of the contract term.
  • More expensive than buying. 
  • Lower credit score = higher interest rates.
  • Late payments = damage to the credit score.
  • Impractical as a very short-term agreement.

If you’re still undecided on what finance option to choose, check out our breakdown of the advantages of personal contract purchase (PCP) and our quick decision tree to see whether it’s worth it for you to buy a vehicle or fully commit to the bus / Uber lifestyle…

We’ve also created this FREE budget tracker download which could help you plan out your finances and see what you can really afford to spend on a new vehicle.

This information is intended for editorial purposes only and not  intended as a recommendation or financial advice