Guest Contributor: Creditplus, An e-zoomed Partner
For drivers who are looking to spread the purchase cost of an electric vehicle across fixed monthly payments, hire purchase could be one of the best options. The entire cost of the electric car is split over an agreed period, often three to five years, and the repayments plus interest are divided into fixed monthly instalments.
The reason hire purchase is a popular option for EVs, is because at the end of the agreement the eco-friendly car is yours to keep. If your circumstances change during the contract, there is also the option to pay off the remaining balance early.
Hire Purchase Could Be The Ideal EV Financing Method If You Are Looking For:
- A finance product which is available to a variety of credit profiles.
- The ability to budget easily with fixed monthly payments.
- An agreement with no mileage limits if you drive above-average miles.
- A car which you’ll keep for longer than the agreement length.
So, How Does Hire Purchase Work?
Let’s imagine that you want to purchase a used all-electric Nissan Leaf. It’s worth £12,800 and you choose a four-year agreement, with an APR of 10.9%. After putting down a £500 deposit, the amount of credit required is £12,300. The amount borrowed and the interest is divided into 48 monthly payments of £314.27. This means the total amount you’ll pay back over the four years is £15,698. When you’ve made the last payment, the car is now yours to keep.
One of the main differences between hire purchase and personal contract purchase (PCP) is that you own the car at the end in a hire purchase. Unlike PCP, there is no balloon payment to pay or refinance and if you’re driving above-average miles, then having no-mileage limits could be more cost-effective.
For drivers with a less-than-perfect credit history, hire purchase can be one of the best options as it has the highest approval rate of all car finance options.
Brokers typically work with a large panel of lenders who are able to help you find the best deal, even if you have been refused car finance elsewhere.
When comparing your options, it’s worth noting that hire purchase will usually always have higher monthly payments than personal contract purchase or leasing. This is because you are making repayments on the entire vehicle and will own the car at the end. Other finance products require you to pay balloon payments at the end of the agreement to own the car, or simply return it to the lender. So, if you’re looking for a straight-forward method to finance an electric car which you’re looking to keep for longer than the term length, then hire purchase could be the best option. If you’re more likely to want to upgrade your car every few years, then PCP or car leasing might be more worthwhile.
We at e-zoomed are more than happy to assist you with all your EV needs to include:
- Compare and buy an electric car in the UK
- Compare affordable electric car finance and lease deals in the UK
- Compare and buy best electric car insurance deals in the UK
- Compare and buy best electric car breakdown cover in the UK
- Compare and buy green electricity for your home and electric vehicle
- Compare and buy best priced electric car charging cables and EV accessories
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