Hire Purchase (HP) car finance
Here’s what you need to know to help you decide if a Hire Purchase (HP) deal is right for you.
How HP works
HP is a finance agreement that allows you to spread the cost of buying a car over an agreed period of time. You pay a deposit followed by fixed monthly instalments until the agreement comes to an end. There also won’t be any excess mileage fees.
HP and PCP representative example. If your borrow amount is £6,000 with a deposit of £1,000, a selected term of 48 months, at a representative APR of 18.8%, you would pay £174.22 per month. Total charge for credit will be £2,362.56 and total amount payable is £9,362.56. CarMoney Limited can introduce you to a limited number of finance providers based on your credit rating and CarMoney will receive a commission for such introductions that can either be a % of the amount borrowed or a flat fee. This does not influence the interest rate you’re offered in any way. CarMoney is a broker not a lender. For full T&Cs please click here.
This calculator is for illustration purposes only. Your actual repayments could be lower or higher depending on your personal circumstances. The make, model and age of the car you’d like to purchase will also impact the final figure quoted.
A HP deal might be right for you if you:
- Want to own the car without making a large final payment when the agreement ends.
- Are happy to pay higher monthly payments than a PCP agreement as there isn’t a large final payment.
- Like to know exactly how much you’re paying every month.
You can estimate your monthly payments and find the right finance deal for you with a HP finance calculator.
When you apply for a HP agreement, a hard credit check will be completed, however the process varies between lenders.
What happens at the end of the HP agreement?
You’ll likely have to pay a small ‘Option to Purchase’ fee at the end of your agreement, which typically costs between £1 and £10. This covers the cost of transferring ownership of the car over to you.
After all monthly payments and the ‘Option to Purchase’ fee have been made, you’ll become the legal owner of the car.