Home - FinanceHire Purchase Loans AdviceAlthough hire purchase has many advantages, you are at risk of losing the item you want if you do not keep up with the payments If you want a cheap way to pay for a major financial item, then you should look at the possibilities of hire purchase. Hire purchase can help you to buy expensive items with cheap monthly payments, thereby allowing you to get the things you want more quickly. If you are tired of waiting to save your money for expensive items, then here is some information about hire purchase loans. Related Writings: What are Money Market Accounts? - Like a regular savings account, the money that you invest in a money market account earns interest. Interest is the money that the bank or credit union will pay you in order for them to use your money to fund loans to others. What is hire purchase? Hire purchase is a form of lending, whereby you obtain goods and then pay back what you owe over a period of time. You pay a deposit, and then pay back part of the cost in monthly instalments, adding interest. Then at the end of the loan term you decide whether or not you want to keep the item. If you want to buy the item outright, you settle the remaining balance. If not, you simply give back the item to the provider, or use its value to exchange for something else. Related Writings: Unsecured Credit Card Applications - Do you need help on understanding an unsecured credit application? You are not alone. These applications can be very confusing and misleading. A form of leasing Hire purchase is not really buying goods, but leasing them. Although you have the option to buy the product at the end of the contract term, during the contract do not own the product. Instead, you pay the monthly instalments as a 'rental' fee, even though this money goes towards the total product value. This is good because it allows for flexibility and reduces depreciation, although it is bad in that you are not the owner of the item. If you were to miss payments, you would have to give the item back and would have wasted the money you spent. Related Writings: Are Your Finances Ruining Your Marriage? - Finances are one of the pillars that hold a marriage together. Do you and your partner understand what's expected of each other? What items is hire purchase good for? Hire purchase can be used for a variety of items, but is usually good for expensive products that will last a few years, as the payment terms usually range for 1 to 4 years. Items that hire purchase is good for are cars and other vehicles, computers and furniture. All of these items can be 'rented' and then paid for at the end. Low monthly payments Even though you do not own the product, hire purchase is good because the monthly payments tend to be low. If you can put down a decent deposit, then you can get an expensive item for relatively little money each month. This can help you to stay within your budget and not get into debt. Also, hire purchase costs tend to be less than traditional loans, even if you decide to make the final balloon payment at the end. Related Writings: Your Guide to Asset Based Lending - The term asset based lending refers to secured financial loans disbursed against security that may consist of a variety of assets. Businesses are able to borrow money using their current liquid assets like inventory and/or accounts receivable or against fixed assets like plant and machinery, property, equipment... Swapping old for new Another major advantage of hire purchase is that when the term is up, you can use the value of the product and put it towards a new one. This is especially useful for things such as computers or cars, as you can continually upgrade for a less than you would normally. If you want to keep your products new and fresh without shelling out a fortune, hire purchase might be a good idea for you. Related Writings: If You Needed Money Today, Do You Have An Option? - Yes! If you have an open checking account and a job, in most cases you can obtain the funds that you need to get by until your next paycheck. Make sure you can afford the repayments Although hire purchase has many advantages, you are at risk of losing the item you want if you do not keep up with the payments. You do not own the product, so even a slightly late payment might cause seizure of goods. Make sure you always pay on time and that you can afford the repayments before you sign up. That way you will get the most out of hire purchase loans. About the author: Peter Kenny is a writer for The Thrifty Scot, please visit us at Secured Loans and Loans Home - Finance |