Hire Purchase with a balloon payment is very similar to a standard Hire Purchase agreement , but like a PCP a certain amount of the loan is deferred until the end as a final “balloon” payment. The balloon amount is fixed, but unlike a PCP there is no Guaranteed Minimum Future Value and the final payment has to be settled at the end of the agreement if you want to take ownership of the vehicle. The alternatives are part exchanging or refinancing the vehicle.
A Hire Purchase with Balloon agreement will offer lower monthly payments than an equivalent HP agreement without a balloon. The balloon amount can also be more flexible for vehicles with strong residual values such as collector or classic cars, potentially offering lower monthly payments for cars that do not qualify for a PCP agreement due to their age.
Agreements are available from 24-48 months.
HP (Hire Purchase) agreements are based on a fixed monthly cost, meaning that the APR (Annual Percentage Rate) is set before the contract begins. The finance agreement is secured against the vehicle and this provides the lender with some flexibility regarding the terms they can offer.
The amount you wish to borrow is based on the value of the vehicle you purchase, minus any deposit you are able to provide. A deposit can be in the form of cash element or a part exchange vehicle.