Hire Purchase System: These are advantages and disadvantages! Even with a solid deposit on the transaction, the interest rates of a lease agreement mean that the final cost of the item is higher than if it were purchased directly. For example, during the term of a 5-year contract, the final cost of a vehicle worth $US 21,000 can exceed $30,000 if all payments are added together. Some buyers may qualify for inexpensive or free financing to reduce this problem, although this disadvantage applies to the average deal. The pros and cons of leases create a win/win situation for all parties involved. Buyers will have the option to use and own devices that they may not be able to purchase immediately. The interest rate and monthly payments are set throughout the term of the contract. Thus, you can plan expenses and cash flow accordingly. A high payment at the end of the contract, the so-called “balloon payment”, can also be used to reduce monthly payments. We encourage our customers to have seriously thought about how they will finance the balloon payment. While this can be daunting, there should be no reason to discount rental purchase as an option, as the best solution is to plan financially and carefully manage your cash flow. . . .