I really want to purchase a new sports car but cannot afford an outright purchase. The seller is willing to enter into a hire purchase agreement with me. I am aware the car requires insurance but who must pay for that?
Lawyer Answers (1): Answers from lawyers are general preliminary responses. They are not formal legal advice and cannot taken account of all your circumstances. They do not create a lawyer–client relationship.
Answer by Shamaila Khan, Kingsville 3012 VIC
- You must pay for the insurance. In most cases comprehensive insurance on the vehicle will be compulsory and it will be up to the buyer to make the necessary premium payments.
- Even if insurance is not compulsory it is advisable to obtain it at your own initiative. Insurance will protect you in the event you are in an accident. This is particularly important in a hire purchase agreement scenario. If you write off your car you will still be liable to make repayments even though the car is no longer usable. Depending on your situation you may then need to purchase a second car. This can put excessive strain on your finances.
- Remember to budget the insurance amount into your expenses when deciding whether or not you can afford to enter into the hire purchase agreement.