A person can save more than €1,100 on a typical five-year hire purchase agreement if they shop around, a survey by the financial regulator Ifsra has revealed.
Published today, the survey compares 11 of the main hire-purchase providers and features two profiles of consumers buying cars using hire purchase.
Consumer Director Mary O'Dea
In the first case, the cost of finance for an €8,500 car, paid for over 36 months, ranged from €1,036 at the Permanent TSB to €1,346 with Ford Credit.
In the second case, the cost of finance for a €22,000 car, paid over 60 months, ranged from €3,408 at the Permanent TSB to €4,217 at the Bank of Ireland and €4,560 at Ford Credit.
Consumer Director Mary O'Dea said: "Hire purchase is just one of the options for people buying cars and is often offered by car dealers.
Ms O'Dea said: "Knowing which providers offer the best hire purchase deal may help you negotiate a better deal with a garage that is offering you finance for your car.
"It is important to think about whether a hire purchase agreement or a personal loan best suits your needs if you are buying a car.
"The most important difference between financing a car using hire purchase and using a personal loan is that with a personal loan, you own the car from the outset and can sell it without having to inform your lender," she said.
The survey also warned people that one of the conditions of ending a hire purchase agreement early is that the consumer must pay half the hire-purchase price, less the total payments made to date. This is known as the "half rule".
So if the total hire purchase price is €20,000 and the consumer has paid a total of €3,000, they must still pay another €7,000 to bring their payments up to half the hire purchase price of €10,000 and must also return the car to the finance provider.