Car Hire Purchase

1. Personal banker
2. What does the term ‘HIRE PURCHASE agreement’ mean?
3. How can I obtain financing for my new car?
4. How is the repayment period decided?
5. What collateral is needed?
6. How is the interest rate set?
7. What is the total cost of the financing?
8. What is the Annual Percentage Rate (APR)?
9. How is interest calculated?
10. What happens if I delay paying my instalments?
11. When do I have to pay my instalment?
12. What happens if conditions change and I have difficulties in repaying my instalments as I had planned?

1. Personal banker

To ensure that you receive proper service so that to fully satisfy your personal needs, we have introduced Personal Bankers who are highly-trained individuals at our network of branches. These officers offer rapid, responsible, professional customer service and you can discuss with them everything needed to tailor your car loan to your needs.

2. What does the term ‘HIRE PURCHASE agreement’ mean?

A HIRE PURCHASEis provided by the Bank to allow you to buy a new or second-hand car of your choosing.

The car is financed based on hire purchase terms and conditions. In other words, after the  approval, the car is transferred by the seller into the name of the Bank and your name. When the hire purchase is paid off, the car is transferred to you as the sole owner after you pay a small token amount to the Bank as the purchase fee.

3. How can I obtain financing for my new car?

You can obtain financing if you are aged 18 to 65, are in work or have other sources of income.

The procedure is straightforward, since you can submit an application  directly to the car dealer. Of course, you can also submit your application at any of our branches.

When your application is being examined, you may be asked to pay a down payment or provide collateral such as personal guarantees. Once approval is given, you can sign the necessary documents at any branch of Bank of Cyprus Hire Purchase & Leasing or our network of bank branches, or in some cases at the seller’s offices depending on the  amount.

Once the paperwork is signed and the approval terms and conditions are met, the Bank will pay the seller the price and you can pick up the car immediately.

4. How is the repayment period decided?

The repayment period depends on the type of car. In other words, if it is a new car, you can enjoy a longer repayment period compared to a second-hand car.

Another definitive factor affecting the repayment term is the size of the instalment you are able to pay, meaning that a low instalment increases the overall duration while a higher instalment shortens the duration.

5. What collateral is needed?

The collateral is the car you purchase. There are cases where you may be asked to provide additional collateral such as personal guarantees, blocked deposits, etc.

6. How is the interest rate decided?

The interest rate depends on:

  •  the type of car, i.e. whether it is an old or new car
  •  the size of down payment made, i.e. the higher the down payment the lower the interest rate.

The interest rate is variable.

7. What is the total cost of the financing?

The total cost includes:

  •  interest
  •  the purchase fee specified in the contract
  •  Government charges such as stamp duty and vehicle transfer charges.

If the repayment is in accordance with the terms of the contract there will be no extra charges.

8. What is the Annual Percentage Rate (APR)?

The APR is the total cost of borrowing for the consumer, expressed as an annual percentage on the financing offered. The APR includes all cost factors (including interest and all charges, which consumers have to pay).

The APR is the best tool available since it includes all costs and helps you have a better picture when comparing various products from the Bank or other banks.

9. How is interest calculated?

Some useful tips on how interest is calculated are provided below:

  •  Interest is always calculated on your daily balance. As a result, over time interest reduces given that the balance decreases because of the payments you make.
  •  Interest is calculated by multiplying the daily interest rate by the daily balance.
  •  Interest I accrued is added to the balance (capitalised) twice a year on specific dates (30/6 and 31/12).

10. What happens if I delay paying my instalments?

If you do not repay your instalments as agreed, additional charges will be applied. The charges take the form of a higher interest rate on the amount that has not been paid. To avoid any additional charges, make sure you repay your instalment on the specific date agreed.

11. When do I have to pay my instalment?

Your instalment must be paid on the date specified in the terms and conditions. To avoid paying unnecessary charges, talk to your Personal Banker to arrange a date from the outset which suits you for payment of the instalment. If that date changes in the future, you should contact your Personal Banker in good time to make the necessary adjustment. To make things easier for you, the right thing to do is to give the Bank written instructions so that your instalment is paid automatically from your current account.

12. What happens if conditions change and I have difficulties in repaying my instalments as I had planned?

If your financial situation changes and you cannot repay your debts and pay your instalments as agreed, you should contact your Personal Banker in good time to arrange a new repayment schedule which reflects your new circumstances.

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