The most important fact to keep in mind about U.K. car hire purchase is that you are acquiring a motor vehicle which is a piece of machinery that depreciates as it wears. (Unlike a house which will increase in value over time and can represent an investment). Buying a nearly new car gives you a great advantage in that the initial ‘hit’ of car depreciation has already been taken.
For most used vehicle acquisitions by far the most popular method of acquisition is U.K. car hire purchase. You pay a deposit on purchasing and the balance over a period of months. We have examples here on our web site to give you an idea of what the monthly payments are. Two significant advantages of conventional car hire purchase are that the vehicle is security for the loan and that, if you take out car hire purchase, it may not impede on your existing credit lines or take up savings or working capital that you are using in a business.U.K. car hire purchase is also a very flexible product. You do not need to complete your agreement before changing the vehicle as the agreement can be settled early, and penalties for doing so will only apply in the early stages of the agreement, if at all. There is a car residual value when you dispose of it in the future, which usually is in excess of what you owe. You can find out the amount of the vehicle residual value. Then you can calculate the drop from the price you buy it for, to the price you will get when you sell it. It is possible to arrange finance on a vehicle where this is taken into account before you start. Contact me for more details about this. So you pay an initial payment or deposit, monthly payments and a final payment equal to the car residual value. (Or van residual value). This U.K. car hire purchase product is particularly useful for expensive vehicles as it reduces the monthly payments. The important aspect of financing your vehicle in this way, is that you are paying out monthly for the car depreciation on your vehicle instead of suffering in one large payment when you come to change it for your next car or van.You can always call me if you need anything explaining. 01622-662366. Or use the contact form
on this page. Or view the site’s glossary of terms.
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