Most dealers offer hire purchase agreements as their car finance loans. Hire purchase differs from a loan in that you won’t own your car until you make the final repayment. With a loan, you own your car from day one.
Dealers who offer hire purchase tend to do so as agents for finance companies in return for a commission. These finance companies provide the loan, not the dealer. The finance company then rents the car to you in return for a regular repayment over a number of years. Once the last repayment is made, the ownership of the car passes from the finance company to you.
Hire purchase agreements are one of the least flexible forms of finance. The interest rate is fixed for the term of the agreement, so there is no option to increase repayments, and increasing the term of the agreement may result in a rescheduling fee. If you want to pay the full hire purchase price early, you can do so. You won’t have to pay the full interest amount owed, but you will end up paying more than you would in a less restrictive loan. Missed repayments can also result in interest surcharges and penalty fees.
Typical fees and costs on a hire purchase agreement
The fees and charges on hire purchase agreements can vary, but may include:
• Documentation fees – a fee for setting up the hire purchase agreement
• Interest surcharge for missed repayments – an additional interest charge on any missed repayments
• Penalty fees – for missed or late payments, in addition to interest surcharge
• Completion fee – to facilitate transfer of ownership of the car to you
• Repossession charge – a fee for repossessing the car
• Rescheduling charge – a fee for changing the loan terms
• Balloon payment – a large repayment at the end of some hire purchase agreements
Skibbereen Credit Union Car Finance
• You own your car from day one
• You can sell your car at any time.
• You can borrow for the full amount, or borrow more to cover insurance, tax, etc.
• There are no hidden fees, admin charges, transaction charges, set up costs or balloon payments.
• Repayments are calculated on your reducing balance, so you pay less interest with each repayment
• If you pay off your loan early, there are no fees or charges
• Increased repayments will result in less interest being charged
• If you need to reschedule your loan, we will work with you to adjust your repayments
• Your loan is insured in the event of your death at no direct cost to you.
