Hire Purchase is a very simple and traditional way of financing a vehicle, it’s secured against the vehicle until the final payment has been made. Fixed monthly payments throughout the agreement, the initial deposit and term of the agreement can be varied to meet your budget and the length you are looking to keep the car.
A guaranteed fixed month payment is agreed at the start of the agreement, as well as the interest rate. During the agreement you can pay off lump sum amounts, you can also settle the agreement by paying the required settlement figure. Once all payments have been made the vehicle is yours.
Similar to a Lease Purchase finance agreement, but part of the vehicle cost is deferred until the end of the agreement and is known as the Guaranteed Future Value (GFV), sometimes referred to as the Optional Final Payment, the reasons for this is explained below.
At the end of a PCP agreement you have 3 options: