7 Key Insights About Hire Purchase Loans to Save You Money and Time

7 things you need to know about a Hire Purchase loan

There are seven things you should know before you ever think of getting a Hire Purchase loan. Knowing these things will give you control and power in the loan process. Power and control will will save you money

Most common type of vehicle and goods financing is through a Hire Purchase Loan product. This is for those who do not have the cash at the time or want to conserve their cash. They are able to buy the goods and pay them off over a period of a Hire Purchase Loan. The lender owns the goods until complete payment of the Hire Purchase loan are made &then the title is passed on to the person/s who paid off the loan.

Questions for a financial advisor.

Always make a point to ask your taxation or financial advisor on the effects of tax and cash flow management.

Do the loan repayments and laon residual balloon payments include goods and services components?

Need Money for a Bike?

We offer fast, free, easy access to the best Bike Loan rates and options in the Australian market. Simply use our 3-minute Bike Loan enquiry form to see if you qualify … and you'll get instant access to our national specialist Bike Loan broker network for free advice and assistance through the approval process. No charge, no obligation!

... compare bike loans ...

For asset depreciation and interest deductibility are the assets effectively owned by me even though the title does not pass until the loan maturity?

On a cash accounting basis for goods and services tax must I claim the goods and services tax component proportionally across the loan term?

If I am on a cash accounting basis for goods and services tax are likely to be unsuitable for hire purchase loan?

Should the goods and services tax I am going to pay be financed through a loan or should I pay cash for it and keep it out of the loan?

Loan term

Generally loans in hire purchase are for 12 to 60months.It is very important that you take into account the life of the goods you are buying compared to the life of the hire purchase loan.

How long will they last? Take a computer for instance.It is unlikely they will last longer than three years. So why would you take out a hire purchase loan for 5 years. Fit the term of the loan around the use by date of the product.

If you are given a 5 year guarantee on the product then you can go for the 5 years Hire Purchase Loan.

Supplier and dealer invoice the lender directly.

It is best that you shop around for the hire purchase and avoid using the retail stores package.

Contact a Finance Broker for an introduction to the finance package you require.Once you have selected the finance provider,inform the retailer and they will bill the lender directly. That is all you have to do with the retailer.

Deposits and trade-ins can be used.

It is important to see the effect of a deposit or a trade-in on the monthly payments and the term of the Hire Purchase.

When you are buying ensure that you get a trade- in, look at what you can sell it for directly before you go to the seller.

Loan can be fully amortised or balloon payment factored in.

Generally you can either pay the loan out in equal payments. This is called amortisation.

Alternatively you can make equal payment for all payments except the last one. The last one can be up the 50% of the total loan. This is called a balloon payment.

Be very careful and ensure that you have a good understanding of balloon payments. It is critical that you are can estimate the potential value of the goods you are buying in three or four years time at the time of the purchase.

Other payments structures such as seasonal payments are available.

Discuss your cash flows and have on hand the documents to prove what you saying. In these cases you will be surprised what a lender will be able to do to fit in with your household or business.

The golden rule: ASK!!

While it may state the obvious, many people get into financial difficulties by having multiple Hire Purchase Loan agreements running simultaneously. They are in effect loan financing the house or the business.

While credit cards are the primary destroyers today loans via hire purchase and personal loans are up there. You must be very aware of this and take responsibility to act conservatively when dealing with loans.

So what should you do? Do not take on more Hire Purchase Loans than you can safely repay!

Published: Sunday, 1st Aug 2021
Author: 150

Personal Loans Articles

Is Refinancing Your Personal Loan Right for You? Weighing the Benefits and Drawbacks

Have you ever heard the term loan refinancing and wondered what it actually means? Simply put, refinancing a loan involves replacing your current loan with a new one, typically to take advantage of better terms, such as lower interest rates or different repayment conditions. - read more

Effective Credit Repair: Long-Term Strategies for Sustained Improvement

Maintaining a good credit score is crucial for financial health. In Australia, a solid credit score can unlock better interest rates, higher credit limits, and improve your chances of loan approval. - read more

Mastering Money Management: The Essentials of Personal Budgeting

Embarking on a journey towards financial stability begins with the mastery of personal budgeting. It's the cornerstone of sound money management, where every dollar is allocated purposefully, paving the way for a future free from the shackles of financial stress. In this all-important first step, individuals learn the fine art of balancing their earnings with their expenditures, a fundamental skill for anyone looking to navigate their finances with confidence. - read more

A Credit-Savvy Approach to Loan Comparison: What Every Australian Borrower Needs to Know

Welcome to your essential guide on how to navigate the complex world of personal loans in Australia. Whether you're seeking to finance a major purchase, consolidate debt, or cover unexpected costs, understanding the nuts and bolts of personal loans is crucial. In this conversation, we'll shed light on why being credit-savvy is not just smart, but necessary for anyone considering a loan. - read more

Effective Credit Repair: Long-Term Strategies for Sustained Improvement

Strategies for Managing Your Loans During Economic Uncertainty

Economic uncertainty refers to a period of unpredictability and instability in the financial markets and economy. It can be caused by various factors such as global events, political climates, or shifts in market dynamics. During these times, individuals and businesses alike may struggle to predict what will happen next, leading to widespread concern and caution. - read more

Finance News

RBA Proposes Ban on Card Payment Surcharges

15 Jul 2025: Paige Estritori

The Reserve Bank of Australia (RBA) has proposed eliminating surcharges on debit and credit card transactions, a move that impacts all major card providers such as Mastercard, Visa, and eftpos. As revealed in a newly released consultation paper, the RBA cites the $1.2 billion annual cost to consumers, highlighting inefficiencies and advocating for a unified approach to card payments. - read more

Future2 Foundation Seeks Nominations for Financial Wellbeing Grants

15 Jul 2025: Paige Estritori

The Future2 Foundation has opened nominations for its annual Make the Difference Grants, providing financial support to initiatives that enhance financial wellbeing across Australia. Financial services professionals have until August 21 to nominate local projects aimed at improving financial literacy, assisting those in poverty, supporting disadvantaged women, and benefiting regional and remote communities. - read more

Increasing Number of Qualified Financial Advisers Opt Out of Practice

11 Jul 2025: Paige Estritori

Recent analysis from WealthData indicates a growing trend among financial advisers in Australia, where a significant portion of those who have successfully passed the financial adviser exam are opting not to practice. As of now, 5,096 individuals, representing 33.31% of active advisers, have chosen not to proceed into practice after passing the exam—up from 28.36% a year prior. - read more

Need Help Finding a Loan?

Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check!

All finance quotes are provided free (via our secure server) and without obligation. We respect your privacy.

Knowledgebase

Private Mortgage Insurance (PMI):
A type of insurance that a borrower might be required to purchase as a condition of a conventional mortgage loan, if the down payment is less than 20% of the property value.