Hire Purchase Agreements Explained

Understanding our vehicle finance

So, what is hire purchase finance? Put simply, Hire Purchase is a type of credit that is secured against goods being purchased (in this case a vehicle). When you take out a Hire Purchase you will make fixed monthly payments (this means they are the same each month) over an agreed amount of time. As the name suggests, a Hire Purchase means you are hiring the vehicle until the money owed is paid in full - you will only own the vehicle once all payments have been paid.

We're happy to say that we will not charge our customers any additional fees as we do not believe this is fair, instead you'll simply pay the price of the vehicle along with any interest.

Please note: some information on this page will inform you of legal requirements of a Hire Purchase agreement and some information will be First Response Finance’s own personalised policy for customers.

Hire Purchase Pros & Cons

Pros
  • Simple to arrange
  • Fixed monthly payments
  • Fixed interest rates
  • Flexible term lengths 24-48 months
  • Most vehicles HPI checked
  • Vehicle belongs to you after final payment
  • Particularly suitable for purchasing vehicles
Cons
  • The vehicle belongs to us until you pay your final payment
  • If you don't keep up your repayments your vehicle is at risk of being repossessed
  • Not suitable if you are planning on paying off your loan within a short period of time.

If you're interested in finance make sure you read our application process to understand how your application will be dealt with.

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Our process

Customers spread the cost of the vehicle by paying fixed monthly payments (an amount which includes vehicle price, agreement fee and any interest) over a fixed period of time. A longer term means smaller repayments but the total amount payable will be higher (due to interest).

The total amount payable can be reduced if you pay an initial deposit; however, this is not required.

Once you have made all your payments and are at the end of your agreement ownership of the vehicle will be automatically transferred to you.

Our customer process for hire purchase

Payments

By comparing APRs on finance deals you can see which is cheaper as the APR takes into account all fees and money which will have to be paid back.  If you choose to compare deals in this way make sure you are comparing the same loan amount and the same loan term (e.g £5,000 over 36 months).

We advise and actively encourage you to choose a payment which is over the shortest term you can comfortably afford. We can agree your repayment term over any number of months from 24 to 48 months allowing us to adjust to your specific requirements.

If you have already chosen a vehicle all you have to do is agree the monthly repayments over your chosen term.  If you are still looking for a vehicle then we can help by recommending motor dealers in your local area who we have dealt with in the past.

Who owns the vehicle?

You are the ‘registered keeper’ of the vehicle and are responsible for insuring and maintaining it, but First Response Finance remains the legal owner until the amount you borrowed, plus the Option to Purchase Fee has been fully repaid. You are not allowed to sell or dispose of the vehicle without our permission. If you do, you’ll be committing a criminal offence.

First Response Hire Purchase for vehicles

Hire Purchase agreements explained for vehicles

When all the repayments have been made, we will transfer ownership of the vehicle to you.

If you fail to honour a Hire Purchase agreement by missing payments, we can legally repossess the vehicle; this is not very common at First Response Finance as we actively work with customers to ensure it doesn’t get to this stage. However, if it were to come to this we sell the vehicle at auction and the money raised would be used to repay your debt. If it doesn’t cover the whole amount remaining, you will still be obliged to pay the balance plus any fees incurred.

You also have the right under a Hire Purchase agreement to voluntarily terminate (VT) the contract and surrender the vehicle back to the finance company at any point. Under these circumstances you must pay, or have already paid, half the contractual repayments rather than the full amount. It is usually, but not always, the most desirable thing to do from the customer perspective and thus the one we would encourage if you no longer require the vehicle, or if it is simply unrealistic to keep it due to personal finances.

Why choose First Response Finance?

First Response are number 1 on Review Centre

First Response are number 1 on Review Centre. We will look at each case individually and to consider a loan we will talk to you directly and discuss your needs, budget and your choice of vehicle. By adding this personal touch we are able to get a better understanding of your needs and will be able to create the best deal possible for you.

As a responsible lender we won’t lend to any customers where our product will cause financial stress. We understand life can throw unforeseen circumstances and this may cause you to struggle making the repayments. If this happens then please get in contact and be honest about your circumstances; we are flexible, accommodating, and we endeavour to support and work with you through any difficult period if we can.

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Independent advice

At First Response we believe our customers should be happy with everything before they sign their Hire Purchase agreement. Where possible we will always encourage customers to seek independent advice on finance, debt or dealing with money.

Read information on different finance options by click the button below. This website was set up by the government to ensure consumers have as much knowledge about their options before agreeing to a finance agreement.

Independent advice on finance

Further advice is also available from The Citizens Advice Bureau. Here you will find information on debt, different types of borrowing and more general Hire Purchase information.

Information from Citizens Advice