Hire Purchase Agreement

showbiz15

Hi All,

I would like a little bit of advice of people that have probably had the same experience.

I have been rejected for car finance, I've not got a perfect credit rating. Since I've had my credit cards all cards have been paid on time, with the exception of 3 payments across 3 cards.

So, I've looked elsewhere online for car finance / leasing options. I've been accepted by time4leasing, I.e creditplus for a car on Hire Purchase. The car I'm going for is the car I wanted from Arnold Clark, which is a huge bonus.

My make question about this is: will me paying the Hire Purchase agreement every month improve my credit rating and credit score?

I would like to note that I am currently paying my credit cards off buy making 2 X more at least than the minimum payment each month. I also cannot spend on these as I've chopped them up! To give a the people a more imager into my situation, between my 3 credit cards I have £5000 credit limit, £4500 of which has been used.

Any help would be appreciated on whether or not HP will improve my credit rating. I do know the ins and outs etc of missing a payment.

Ben8282

This is one of those PCP things where you don't own the car at the end of it. Have nothing to do with it. Get a loan or save up and BUY a car that you will actually own. Or buy a second hand car that you can actually afford and repay some of the cc balances.

fruitisbad

Ben8282 wrote: »

This is one of those PCP things where you don't own the car at the end of it. Have nothing to do with it.

Where have you got that from? Looking at their website it says they do both PCP and Hire Purchase.

Hire purchase isn't a credit agreement, they retain ownership of the car (until it's been paid off) and can reposes it if payments aren't made so logic would say that it's not reported to CRA's however things like utilities are, it would probably be down to the company offering the agreement and whether they report. Best bet would be to ask them.

National_Debtline

It would ultimately be up to the lender whether or not they record the information on your credit file, but generally speaking, a hire purchase agreement would be recorded from the time the credit is obtained. If you maintain the monthly payments then this will be recorded each month on your file and, likewise, if you don't pay.


Fruitisbad is right - the car isn't yours until the final payment is made and if you fall into financial difficulties during the agreement this could cause problems, not just for your credit file. Hire purchase agreements are normally quite strict and there is little room to amend the monthly payments if you are struggling. Make sure you have checked all the different ways you could purchase a car (not just this car) before taking out more credit.


Laura
@natdebtline

antrobus

fruitisbad wrote: »

...Hire purchase isn't a credit agreement,...

Where did you get that idea from?:)

Perhaps from here?

Credit agreements are regulated by the Consumer Credit Act 1974, and hire purchase agreements are regulated by the Hire Purchase Act 1967.

http://moneyaware.co.uk/2012/10/hp-or-a-credit-agreement-that-is-the-question/

A very odd statement to make. Particularly as there is no Hire Purchase Act 1967. (Not in any part of the UK, anyway.)

As it happens, HP agreements (and PCP agreements for that matter) are indeed consumer credit agreements regulated by the CCA 1974.

antrobus

Ben8282 wrote: »

This is one of those PCP things where you don't own the car at the end of it. ....

I think you're confusing Personal Contract Purchase (PCP) with Personal Contract Hire (PCH). PCP is just HP with a baloon payment at the end, but includes the same option to purchase. PCH is the one where you never get to own the car.

antrobus

Ben8282 wrote: »

...Any help would be appreciated on whether or not HP will improve my credit rating. I do know the ins and outs etc of missing a payment.

Taking out any kind of credit agreement, and making all the payments on time, in accordance with said agreement, will 'improve your credit rating'. Not doing so will have the reverse effect.

GingerBob_3

antrobus wrote: »

Taking out any kind of credit agreement, and making all the payments on time, in accordance with said agreement, will 'improve your credit rating'. Not doing so will have the reverse effect.

To expand on that: making ALL payments on time will improve your credit rating by a miniscule amount, if at all. Being late by one day on one payment out of hundreds could have a devastating effect on your ability to obtain credit.