Hire purchase
A way of buying a car where you pay it off in instalments and only own it once the final payment is made. Common for car finance in New Zealand.
Hire purchase is a type of finance where you take the car home and use it straight away, but the lender legally owns it until you have made every payment. Once the last instalment clears, the car is yours.
It works a lot like a secured car loan. You make regular repayments that include interest and fees, and the car acts as security. If you default, the car can be repossessed because you do not own it yet.
Things to check before you sign:
- The total cost of credit, not just the weekly payment
- Whether there is a balloon payment at the end
- Any establishment fees added to the loan
Hire purchase is regulated by the CCCFA, so lenders must lend responsibly. We can help you compare hire purchase offers fairly. Get your fair rate.
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