Technology changes year after year. As we all are well aware of, when new technology emerges, the prices are extremely high to begin with. In some cases, the prices can be double, particularly when we talk about changes in technology. An example of this is digital tv. At first you were able to buy a set top box and receive a digital signal. Then came the digital tv’s themselves. These were expensive when they first hit the market, but as time has passed, the prices have begun to come down.
When a product is expensive many of us will struggle to buy it outright. We then have to look for companies that offer tv rent to own or laptop layby. These often give the consumer the opportunity to spread payments over a period of time so that they don’t have to find an initial outlay. Additionally, these deals also allow you to purchase a new product if your current product has broken down. For example, if you need a laptop repair, you may find that you are actually be better off purchasing a new laptop that getting your old one repaired.
To get the best deals and to make sure that you are not overpaying on a product, you will need to have a good credit rating. This doesn’t mean that you won’t be able to get credit services if your credit score is poor, but it may means you may have to search bad credit appliance rentals or poor credit score hire purchase in order to benefit from these schemes.
What Exactly is Hire Purchase
Hire purchase is whereby you go to a creditor to get a loan for the amount that you need for a specific purchase. Unlike a bank loan, a hire purchase agreement is secured against the product that you wish to purchase. An example of this is a car. If you decide that you want to purchase a car which costs $10,000, hire purchase company may ask you to pay an upfront deposit of approximately ten percent and then the creditor will cover the remaining amount. After this, you will then be expected to pay either weekly or monthly, depending on the creditor, over a period of time. Usually this period of time is one to five years.
As with any credit or loan, you have to be aware of the negatives that come with them. If you take out a loan, this gives you the benefit of being able to purchase a product of value without having to find the money for the purchase upfront. However, the one thing that you have to be aware of is the charges that may be applied to a credit agreement. The fees to look out for are:
- The APR (annual percentage rate)
This figure should be as low as possible, if not zero.
- Administration Fees
Some companies try to add document or administration fees to a credit agreement which means you could end up paying more than just for your appliance. Also, the amount that you borrow can sometimes affect the fees that you may be charged. In some cases, the more that you borrow, the less fees you should pay. That said, always bear in mind that if you borrow more, you will have to pay more each month.
- Miscellaneous Hidden Charges
Each lender may have different changes that may not be obvious at first. So, for example if you are late on a payment, you may be charged a fee for this. If a creditor has to send you out a letter, the may charge fees for this too.
How to Avoid These Hidden Fees
The best advice that you need to take into account is that you need to read the small print that comes with the agreement. As long as you are fully aware and understand what deal you are entering into, you shouldn’t encounter any unwanted surprises. You also need to make sure that you keep up with the payment terms to avoid any charges. As in, if you are late on a payment, then you may end up having to pay late fees. Finally, look into whether borrowing different amounts of money or the specific product that you wish to purchase affects the fees. An example of this is that if you go to an electrical retailer, they may have an offer on some of their products which are interest free, hence you can avoid these fees.
Is Hire Purchase Right for You
There are a number of positives and negatives to hire purchase and in order to understand whether hire purchase is good for you, we will highlight below for you:
- The cost can be spread over a number of months if you don’t have the money upfront.
- Once you have made all of the payments, you own the product.
- Hire purchase agreements are easier to obtain that a standard loan as the loan is secured against the product.
- There are plenty of options to choose from when it comes to a hire purchase agreement.
- The monthly payment can be higher than a standard lease or a loan.
- You don’t own the products until you have made the final payment.
- You can’t sell the product until you have completed the full term.
It becomes clear that there are many positives and negatives to hire purchase agreements. Some fees are inevitable but this does not mean that you should not enter into a contract. The trick is to make sure that you are fully aware of what you are entering into and that no sneaky costs or charges come as a surprise once you have signed on the dotted line.