![]() Research the APR – the APR is the annual percentage rate of interest on your loan.This is typically £100–£200, but it does vary so ask how much it will be. For example, once all repayments have been made you pay a final fee, known as the ‘Option to Purchase’ – once you’ve paid this you’ll own the car. Make sure you understand the terms and conditions of your loan before signing the contract. The loan is secured against the car, which is why you can’t own it until you’ve made your last payment, including paying the Option to Purchase fee. You can check your credit score for free with: The rate could be higher for example because you don’t have a good credit score. For second-hand cars the annual percentage rate can vary from 4%–8%. The rates are often very competitive for new cars, but less so for used cars. Hire purchase is arranged by the car dealer, but brokers also offer this service. The rest of the value of the car will then be paid off in instalments over a period of 12 to 60 months (one to five years). For most hire purchase agreements this will be 10% or more of the vehicle’s value. Usually, you’ll first need to put down a deposit on the car you want to buy.
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