What's important to know about hire purchase?

Study for the Specialist Automotive Finance Test. Use flashcards and multiple-choice questions with detailed explanations to get exam ready!

Multiple Choice

What's important to know about hire purchase?

In hire purchase the finance company is the legal owner of the vehicle until all payments are made. You can use the car and make regular instalments, but ownership only passes to you after the final payment (often after paying a final option-to-purchase fee). This structure gives the lender security while you’re paying off the loan, and it means ownership isn’t transferred immediately or shared during the term. If payments stop, the lender can repossess since they still own the vehicle. This differs from outright ownership or from leasing, where you don’t gain ownership at the end.

In hire purchase the finance company is the legal owner of the vehicle until all payments are made. You can use the car and make regular instalments, but ownership only passes to you after the final payment (often after paying a final option-to-purchase fee). This structure gives the lender security while you’re paying off the loan, and it means ownership isn’t transferred immediately or shared during the term. If payments stop, the lender can repossess since they still own the vehicle. This differs from outright ownership or from leasing, where you don’t gain ownership at the end.

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