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Does Hire Purchase Count As a Loan?

Hire Purchase is a type of borrowing, so technically it is a type of loan, but there are one or two differences between it and a secured loan.

One of the main differences between a Hire Purchase agreement and other types of loans, is that you are agreeing to a payment plan, but you will not actually own the car until all of the payments have been made.

 

Klarna charges its customers no interest since the make their money by charging the retailer 5% of each sale plus a standard fee. Clearly both retailers and consumers find this attractive, with Klarna now boasting around 8.6 million customers.

 

Until recently, Klarna only had a 1% rate of default, meaning that 99% of its customers paid the debt back, however with recent job losses due to Covid-19 and a struggling economy, Klarna’s default rate is on the rise. All signs point towards an increasing number of people getting into difficulties when faced with their overspending. 

 

If you have Buy Now Pay Later debt and are looking for a solution, take a look at our Buy Now Pay Later information page.

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