Hire Purchase Plans

Hire purchase plans are a plan to pay for property not as a lump sum, but as a percentage despot paid off monthly like one would pay for rent.

People make hire purchase plans for the following reasons:
1) They may not have the money or credit to pay for the entire item all at once.
2) They may not want to pay for the property all at once due to estimated finances in the future.
Those two reasons make it hard for someone to buy property, but because so many people need houses in order to build up their wealth and net worth (unlike rent which is lost forever) many individuals decide to create a hire purchase contract that allows them to keep the property for themselves, but pay it off over a long period of time totaling the value of the property plus any applicable interest.

 

Rent to Own
Many people consider this the practice of "rent to own." Essentially, the end result of the rental is to pay off the cost of the property over time, but the method of payment resembles rent. The total value paid is calculated, and as time goes on the value owed goes down until the day where it is paid off in full, and no additional payments are necessary.


The only reason that a hire purchase plan is not considered a "Rent to Own plan" is mostly semantics. The "Hire Purchase" plan is a legal term design by UK law (as well as several other countries) to refer to this very specific type of payment method. There are a few different rules that apply, including how the property is handled in the event of payment problems (since this is not considered a "debt" in the traditional sense, the owner of the property still owns it while the property is being paid off, and is allowed to repossess it if the payment is missed), but in general the concept is very much the same.


Is This a Good Idea?
Since it is not a mortgage, it is not necessarily considered a debt . This can be good for things like credit, etc., which are affected by mortgages and debt. There are also various taxable and non-taxable aspects of this type of payment plan that are unique and beneficial to some, not to others.


In general this is an interesting new way of doing business that has its risks, but also its unique benefits. Before deciding to do a hire purchase plan , you may want to make sure that you will have the finances, etc., that you need to make sure it works successfully. Still, it is an interesting way to purchase property, and because paying rent towards a flat is money that you will never get back, it may be something to consider if you come across a seller that is in favor of the system.




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