Hire Purchase Agreement - what to look out for?

owitemisermusa

Hello all,

Just need some pointers on what to look out for when reading a hire purchase agreement before signing.

All info gratefully received.

Thanks.

OMM

nomoneytoday

The cost and length of contract?

vikingaero

Whatever figures you are told, treat the salesman or the finance manager as a liar. The % rates are often quoted as base rates and will be affected by documentation and application fees. What matters to you is the ultimate price per month - whether that is reasonable to you. Another favourite is for the salesman to ask you how much you can afford per month and lo and behold the cost works out just below that... when you could have had it a lot cheaper. Some dealers like quoting in weekly repayments. You think that the monthly repayment is 4 times that when it's slightly more in reality.

owitemisermusa

Thanks guys.

Already discussed payments and they are as promised.

Need to read the document and want to know what to pay attention to in particular.

e.g is it normal to work out the 50% termination point as a function of the total price payable and not just the amount financed?

Another thing, the correct APR is stated on first page of the agreement but where it comes to the details, another rate is written. This is a "xxx per annum" which I think is the flat rate but it bears no relation to the APR (ie the APR is not roughly double this rate).

Thanks.

Any legal words that I should watch out for etc?

owitemisermusa

BUMP!

I have the agreement and have read through it, just wanna know if I should watch out for anything in particular, common errors etc.

Ta.

Scuttsy

vikingaero wrote: »

Whatever figures you are told, treat the salesman or the finance manager as a liar. The % rates are often quoted as base rates and will be affected by documentation and application fees. What matters to you is the ultimate price per month - whether that is reasonable to you.

Wow someone has been burnt in the past. For the record the FSA would rip any salesman apart who lied in this day and age and if you are buying off a reputable main dealer just do want you are doing and check payment figures and APR's are what you expect.

The termination fee should be 50% of the total amount payable under the loan not the amount you borrow so does include interest. Watch out for any excessive set up fees on the first and last payment this is quite commonplace. Although a less common habit make sure you not paying for any credit protection or other insurance policies you did not agree to. The "fully protected" quote still exists and assumtively includes insurance policies.

The agreement should also include a clause refering to the repossession of the car which cannot be done once you have paid over a 1/3 of the agreement.

Hope this doesn't reach you too late.

owitemisermusa

Thanks guys.
Everything appears in order. All the right clauses are in place.
vikingaero, that's a good tip. The figures are as quoted so I won't go worrying about rates.
It looked fairly standard and it's from a high street bank.
'Documentation fee' was £150 and 'Acceptance fee' is £125, again, fairly standard IMHO.

owitemisermusa

Thanks all.
All sorted now.