With tough competition from the high street banks, many manufacturers and dealers are hitting back with attractive hire purchase offers. These are a cross between a loan and a Personal Contract Plan, in that you have to pay a desposit, but the rest of the loan is then just paid off over a pre-determined period. The key thing is that until the car is fully paid for, it doesn't belong to you; if you default on the loan, your car will be repossessed. The key points about hire purchase are that:

• You hand over a deposit, then pay off the balance in monthly instalments over an agreed period of time.
  
• Most dealers offer HP schemes, but interest rates vary, so check out the APR to tell you the real cost of borrowing.
  
• The monthly payments may be higher than with some other finance methods, but the overall sum paid back is generally lower.
  
• An HP loan is secured on the car, so you won't be evicted from your house, and you own the car outright when you hand over the final payment.
  

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