Balance Payments

A Balanced Payments Hire Purchase (HP) agreement is a type of car finance that offers the benefits of fixed monthly payments with a variable interest rate. This means that your monthly payments will stay the same, but the amount of interest you pay will fluctuate depending on the lender’s reference rate.

Balanced Payments HP agreements are typically available on new and used cars, and they can be a good option for people who want the flexibility of a variable rate finance product with the security of fixed monthly payments.

Benefits of Balance Payments finance

Fixed monthly payments provide peace of mind and budgeting certainty.
Variable interest rate can save you money if interest rates fall during the term of your agreement.
No deposit required (although you may be offered a lower interest rate if you make a deposit).
Option to buy the car outright at the end of the contract.

Drawbacks of Balance Payments finance

Interest can fluctuate, so the amount you owe can increase as well as decrease over the term of your agreement.
You are responsible for the maintenance and upkeep of the car.

Who is Balance Payments finance suitable for?

Want the flexibility of a variable rate finance product.
Are comfortable with the possibility of their interest charges possibly increasing as well as decreasing.
Understand the total amount owed could increase by the end of the term if interests rates rise.

Things to consider before taking out HP finance

Make sure you can afford the monthly payments and the final balloon payment.
Read the terms and conditions carefully to understand any other fees that may apply.

Overall, Balanced Payments HP can be a good option for people who want the flexibility of a variable rate finance product with the security of fixed monthly payments. However, it’s important to be aware of the drawbacks, Such as the possibility of the total amount of interest charges increasing if interest rates rise.