The simplest way of purchasing a new car is by paying the cash up-front. As this option is an unlikely prospect for most people, it is important to consider the various forms of financing arrangements which are available. A Hire Purchase agreement is one of the most common ways that people purchase new cars. If you opt to go down this route, you will pay fixed monthly instalments, with interest, to the car dealership or finance company. A Hire Purchase agreement often requires you to pay a deposit of around 10% of the value of the car at the beginning of the contract. The repayment terms for Hire Purchase agreements can range from between 12 and 60 months. The APR will be set at the start of the agreement and will remain the same throughout. Although the rates offered by car dealerships and manufacturers can often be highly competitive and reasonable, there are some important things to consider with Hire Purchase agreements. Due to the nature of the agreement, you don't own the car until you have paid off all the instalments in full. At the end of the repayment period, you will be given the opportunity to purchase the car outright, by paying the 'option to purchase' fee. As the car dealership or finance company remain the legal owner of the car, you are not allowed to modify or sell the car during the repayment period. In addition, as the loan is secured against the car, there is a chance that your car may be repossessed, should you fail to keep up with the payments. In this instance, you would lose both the car and the money which you had paid up until the repossession. A conditional sale is the same as a Hire Purchase agreement aside from one key difference. When purchasing your car in this way, you automatically become the owner of the car following the repayment of all the monthly instalments.