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Hire Purchase Agreement Explained | Go Car Credit

A Hire Purchase Agreement is a popular way to buy a car as it allows you to get the car you want without having to put a large sum up front. In fact, around 92% of car sales in the UK are completed using a finance system.

At Go Car Credit, we specialize in helping those with ‘bad credit’ secure the car finance deal that’s right for them. That means that even if you have black marks on your credit history, we can help you pay off your car by buying it again.

To make sure you know everything you need to know about hire purchase agreements, we’ll look at the ins and outs of financing your next car using this method.

What is a Hire Purchase Agreement?

A Hire Purchase Agreement allows you to buy a car in monthly payments, instead of paying the entire cost upfront. Although you pay off your car every month, this is considered part of the ‘lease’, as the car is still owned by the finance company. Once you make the final payment on the contract, you will have paid off the contract in full and own the car.

It is important to note that monthly payments will be agreed between you and the finance provider in advance and may vary depending on how expensive the car you choose is. Interest charges and additional charges are also added to these payments.

What Details Are Included in the Hire Purchase Agreement Document?

A hire purchase agreement is legally binding and should therefore clearly state the terms of the agreement.

At Go Car Credit, we like to keep things clear and simple, so here’s a breakdown of the key points included in the deal:

  • A certain car that is bought with money
  • Funded amount
  • The cost of each monthly installment and the cost of the final amount
  • Dates on which installments will be paid
  • Time to withdraw
  • Additional fees and charges (such as interest)

Hire purchase agreement FAQ

The list above mentions some of the most important details that should be included in the document, below are some of the frequently asked questions about the agreement.

Will interest and APR be added?

In addition to the basic cost of paying for the car, you will also be shown how much you will pay in fees and interest. This additional amount is known as the annual percentage rate (APR).

For more guidance and a representative example, please visit our Hire Purchase Car finance page.

When will I be a registered car owner?

As soon as you get the keys to your new car, it will be yours to drive, and you will be the registered custodian. However, until you pay your monthly installments, Go Car Credit will be the legal owner.

When do I get the car?

Many of our network of authorized dealers offer same day drive-ups. So, once you’ve signed the papers, and given your car a test drive you’ll be able to take it home right away.

Is car insurance included in the contract?

Car insurance will not be included as part of your hire purchase agreement and as every car in the UK is required by law to be insured, you should ensure that you get the same insurance as you would if the car was bought outright. If you enter into a hire purchase agreement with us, you must take out comprehensive insurance for your vehicle. This is to protect you from accidents such as theft, damage, or accident.

Can you opt out of a Hire Purchase Agreement?

There are different ways to get out of a hire purchase agreement, depending on how far along you are in your payment plan.

  • If you change your mind within the first 14 days after signing your contract, you can contact us to cancel the contract. However, you will still have to pay for your car.
  • You can choose to repay your loan early. At Go Car Credit, we do not charge an early payment fee to our customers if they do this.

What Happens If The Car Is Stolen?

If your car has been stolen, the first thing you should do is call the police on 111, and they will give you a crime reference number. You can use this number to notify your insurance provider of the situation, so they can start your claim.

The next thing you should do is notify the lender, as the car is their property. If you have paid off the car in full and are the registered owner, you will not need to notify the lender. Insurance claims can take several months, however, you should keep your payments during this time.

Your car may be found and returned to you. However, this may not be possible, and you will need to use your insurance premium to pay off the balance of your hire purchase agreement. It is possible that this may not be enough to cover the full cost of your payment, in which case we will provide support to help you cover this gap.

What Happens at the End of a Hire Purchase Agreement?

Congratulations! Now you have paid back everything you owe. After paying the £10 purchase fee in your final instalment, the car is now yours to own. At Go Car Credit, we don’t hide hidden fees or balloon fees in our programs, so you won’t have anything else to pay.

Bad credit doesn’t have to keep you off the road. Check out our payment calculator and let’s see what we can do to secure your next set of wheels.

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