Is it reasonable to buy luxury cars?
A hire purchase or an installment plan is an arrangement whereby a customer acquires an asset by paying an initial installment and repays the other part of the cost of the asset over a period of time or term for a contract, in which a purchaser agrees to pay for goods in parts or a percentage over a number of months.
The hire purchase agreement was developed in the United Kingdom in the 19th century to allow customers with a cash shortage to make an expensive purchase they otherwise would have to delay or forgo. For example, in cases where a buyer cannot afford to pay the asked price for an item of property as a lump sum but can afford to pay a percentage as a deposit, a hire purchase contract allows the buyer to hire the goods for a monthly rent. When a sum equal to the original full price plus interest has been paid in equal installments, the buyer may then exercise an option to buy the goods at a predetermined price or return the goods to the owner.
Buying luxury cars in installments
Car hire purchase (HP) is probably the simplest type of car finance plan. After paying a relatively low deposit, you hire your car with the option to buy it by the end of the contract. Here are the facts you need to decide whether a hire purchase agreement could be the right car-buying option for you.
The definition of a luxury car is different in every society and we can’t deny the demand of people to buy these cars. Imagine buying a Luxury car for the EMI of an Endeavour! Affordable car finance, earlier limited to mass market cars, is now available for luxury cars as well.
Today, with the development of technologies in the field of automotive industry, it possible for manufacturers of luxury cars has emerged higher quality, safer and of course more attractive vehicles and manufacturers are able to produce these cars in massive form, that’s why the car companies can sell luxury cars in installments.
Luxury car companies hope the finance options and some aggressive packages will help roll in big numbers. In the volume car market, 75% of all sales are financed, while 60% of luxury cars are financed.
How hire purchase works for cars?
In most situations, you first need to put down a deposit on the car you want to buy. This is usually 10% of the vehicle’s value. 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). Hire purchase is arranged by the car dealer, but brokers also offer this service. The rates are often very competitive for new cars, but less so for used cars.
The loan is secured against the car, which is why you can’t own it until you’ve made your last payment. Make sure you understand the terms and conditions of your loan before signing the contract.