I purchased a car on a hire purchase agreement and four months later I got involved in an accident. The car was written off. The hire purchase agreement was based on a 7 year term. Do I still need to make the repayments?
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Answer by Shamaila Khan, Kingsville 3012 VIC
- Most likely yes. Under a hire purchase agreement you are responsible for maintaining and looking after the vehicle and will be liable to continue making payments even if the vehicle is no longer useable.
- If your car has been written off the money paid to you by the insurer can be used to meet those repayments.
- To protect against unexpected damage to the items some hire companies offer shortfall insurance designed to cover the gap between the value of the car and the amount needed to pay out the remainder of the contract.
- Make sure you ask the seller if they offer this kind of insurance and consider whether it is right for you before you enter the contract.