Hire Purchase Explained

Hire Purchase Explained

A Hire Purchase (HP) is actually considered a finance agreement, not a lease in the traditional sense. The main difference between a HP and something like a Contract Hire lease, for example, would be that at the end of the contract you would own the vehicle outright. Therefore to make it simple we have created the above video ‘hire purchase explained’ to answer all your unanswered questions.

In layman’s terms, a HP agreement involves paying fixed monthly payments for between 1 and 5 years. Once the final payment has been made, the vehicle is yours. Think of it more like a loan you’re paying back, rather than renting a car for that time period.

Finance Lease Explained

Finance lease is not the most popular lease, but it is perfect for some requirements. Finance lease, or FL, offers a more flexible way to finance a vehicle. We have therefore created the above video ‘Finance Lease Explained’.

The contract is similar to contract hire in which your company pays fixed monthly rentals for a certain amount of time. However, the difference comes at the end of the contract.

At the end of the agreement, you will have a final rental. This is larger than your monthly rentals.
The balloon is set by you, and is determined by how much you want to put down initially and how much you are paying monthly. You can pay for this balloon payment by selling your car onto a third party. If it’s a van, you can keep the vehicle and clear the balloon using your own funds or getting a loan to clear

Contract Purchase Explained

There are so many options to choose from when financing your vehicle. And one of the more flexible options of the lot is contract purchase. Therefore we have created the above video ‘Contract Purchase Explained’ to answer all your unanswered questions.

Contract purchase is primarily for businesses. There is a contract purchase for private individuals, aptly named Personal Contract Purchase.

A contract purchase, or CP, is essentially where a company pays monthly payments for a set period of time. At the end of the agreement, you have three options;

Part exchange the car and use the equity towards a deposit for your next car
Buy the car for a pre-agreed amount
Hand the car back (subject to mileage and condition restrictions)

So, there’s quite a bit of flexibility with the contract.

Contract Hire Explained

When people talk about leasing a car, they generally tend to be talking about contract hire. This is because contract hire is one of the most common and popular lease agreements. Therefore we have created the video contract hire explained.

But, what is it?

Unsurprisingly, contract hire is also one of our most popular lease agreements.Contract hire is designed for businesses. There is one for private individuals which is aptly named private contract hire. However, contract hire is essentially where a company rents a car for between 1 and 5 years while paying a monthly rental. After that time is up, they hand the car back.

Who is contract hire for?

Contract hire is perfect for businesses who want to hand the car back at the end of the agreement.

There are also VAT benefits to business contract hire, so contract hire is also perfect for VAT registered businesses.

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Personal Contract Purchase Guide

Download our guide to understand everything you need to know about a PCP Agreement
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