If you`re considering buying a large ticket item like a car or home appliance, but you don`t have the funds to pay for it outright, a hire purchase agreement with guarantor may be a viable option for you.
In a hire purchase agreement, you essentially hire the item from the seller and make regular payments until you`ve paid off the full amount. The seller retains ownership of the item until you make the final payment. This type of agreement is often used for buying cars or other expensive items.
When you add a guarantor to the agreement, you`re essentially adding a co-signer who agrees to make payments on your behalf if you`re unable to do so. This can be a great option if you have poor credit or a low income and wouldn`t qualify for the hire purchase agreement on your own.
However, it`s important to understand the risks involved with adding a guarantor. If you`re unable to make payments, your guarantor will be responsible for making them on your behalf. This can put a strain on your relationship with the guarantor if they end up having to make payments they weren`t prepared for.
Additionally, if the seller ends up repossessing the item due to non-payment, both you and the guarantor will be responsible for paying any remaining amount owed. This could have a negative impact on both your credit scores.
Before entering into a hire purchase agreement with a guarantor, be sure to carefully consider your ability to make payments. It`s also important to have an open and honest conversation with your guarantor about their responsibilities in the agreement.
In conclusion, a hire purchase agreement with guarantor can be a great option for those who need to make a large purchase but don`t have the funds to do so outright. However, it`s crucial to understand the risks involved and to make sure you and your guarantor are both fully aware of your responsibilities. As always, it`s important to read and understand all terms and conditions of any agreement you enter into before signing.