Hire Purchase

Is Hire Purchase a Good Way to Buy?

Hire purchase is term that we do not really hear much anymore as it seems rather old fashioned. It used to usually be used to buy televisions where you would pay monthly for it and then after a period of time it would become yours. These days the name is not used in the way that it used to be, but there are still places that offer similar deals.

Many of these are catalogues or some shops where you can buy items and then spread the payment across a certain period of time so that you do not have to pay the whole amount of money all at once. The advantage of this for the customer is that they do not have to wait and save up for the item but they can have it right away but pay for it slowly so that it is more affordable for them. There are some pitfalls with this method though.

Firstly you will find that the tem is more expensive. You may find that it is advertised as interest free credit. This implies that there is no extra cost but you will probably find that the price of the item is dearer than you can buy it elsewhere. If it is exclusive to that shop, then they will have added in the cost of the loan into it. This means that you will be likely to find the product or a similar one cheaper elsewhere. Sometimes you can either buy the product outright for a certain price or pay in instalments at a dearer overall price. In both cases it is worth calculating the total price of the product so that you can work out whether you still think that the items offers good value for money. If the price for paying in instalments is dearer consider whether you would still buy the item at that price. See if you can find it cheaper elsewhere and consider whether it will be cheaper to save up for it or get a cheaper loan to pay for it in instalments.

Many people just look at the fact that the product is in manageable repayments and buy it without thinking about how they will manage to afford those repayments. They may look fairly cheap, but if you have to pay over a long term then you will have to find that money each month or week. You could find that in the future you get some extra expenses or that you income reduces and you struggle to pay the money. You may then regret your decision to pay for it this way or even to buy the item at all. You could find yourself going without essentials to pay for it and really struggling.

Often the types of products that these deals are on are luxury items. It is worth taking time to think about whether you really want these items and whether they are worth the money that you are spending. Think about the essentials that you could buy with the money or consider saving up for it so that you do not have to pay extra or worry about making repayments.

If the interest is free and you cannot find the items anywhere else or cheaper alternatives that are the same quality then it can be worth considering doing this. However, you need to make sure that you are really sure that you will be able to make the repayments when necessary. If you miss one then you will find that you will have fees and the cost of borrowing could increase significantly. This could cause you even more debt problems and a lot of stress. Therefore you need to consider the risk and whether you are prepared to take it. Sometimes it is just worth waiting a while and giving yourself time to think about whether you really want the item and whether you think that it is worth the risk of using hire purchase to buy it. You may find that after a while you decide that you do not want it anyway and that the item is not so great as you thought it would be when you first saw it.

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