There are a number of ways in which you could choose to finance your company car.
However, hire purchase can be one of the most straightforward and flexible options for you.
Whether you’re looking to get a car through your company or want a car for your self-employed business, hire purchase could be the best option for you!
Hire Purchase car finance allows you to get the car you want and spread the cost into affordable monthly repayments.
Let’s take a look at how hire purchase could benefit you and your business.
What is hire purchase car finance?
Hire purchase car finance is a simple finance deal that cover the cost of both new and used cars.
Hire purchase allows you to spread the full cost of your chosen car into affordable monthly payments.
You could be asked to put down a deposit at the start of your agreement which can be around 10% of the cost of the car you choose or there are also no deposit options too.
You will also pay interest which can be determine by a number of factors such as credit score, deposit contribution and affordability.
Hire purchase is a type of secured car loan which means that the car is used as collateral in the credit agreement.
You won’t own the car until the final payment has been made at the end of the agreement.
Benefits of hire purchase for businesses
There are a number of benefits to getting a car through a hire purchase agreement:
- Low or no deposit car finance options available.
- The car is yours once you have made all the repayments.
- Fixed, low interest rates throughout the term so there’s no nasty surprises.
- Affordable monthly repayments.
- Improve your cash flow by spreading the cost.
- Get a higher specification or newer car that may be out of your budget when buying with cash.
- Choose your finance term and payments that suit your budget.
Who can get accepted for hire purchase?
Hire purchase can be suited to a whole range of different people and be provided by many finance lenders and brokers.
If you meet the following criteria, you could be accepted for a hire purchase car finance deal with a range of lenders:
- You are 18+ years old
- You have lived in the UK for 3+ years
- You are not currently bankrupt
- You can prove your affordability
How to increase your chances your chances of getting accepted:
Whilst you can still get accepted on the criteria above, there are a few ways in which you could increase your chances of getting approved and also get better car finance rates.
Better credit score, better loan
In general, those with better credit scores are offered lower interest rates which reduce how much you pay overall.
This is because people with good credit scores usually have string evidence of meeting their repayments and this is less of a risk for finance lenders.
If your credit score isn’t in the best place at the moment, you could consider increasing your credit score before you start applying for business finance.
You can help to look after your credit score by making all your payments on time and in full, reducing an existing debt that you have, checking your credit file for any mistakes, and keep your credit usage low.
Put more in, get more out
It may seem counteractive when you want to spread the cost but saving for a deposit can be really beneficial.
You can get car finance with no deposit but having a small deposit can increase your chances of getting approved.
It makes you more attractive to a finance lender because you don’t have to borrow as much.
It can also help to lower you monthly payments and interest rates.