Hire Purchase (HP) is a finance plan that allows you to spread the cost of buying a car over an agreed period of time. Here’s what you need to know to help decide if it's right for you.
You pay a deposit followed by fixed monthly instalments until the agreement comes to an end. The length of your agreement can be between 24 and 60 months and no matter how many miles you drive, there won’t be any excess mileage fees.
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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.
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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.
If you’d like to have more options at the end of your agreement and pay lower monthly instalments, Personal Contract Purchase (PCP) is another way to finance a car.
You have the right to end your HP agreement at any time by settling your outstanding finance. You can do this by contacting the lender who will provide you with a settlement letter, which will state how much is left to pay on your finance agreement.
If you decide to settle your Hire Purchase agreement early, you’ll need to contact the lender to do so.
You’ll receive a letter confirming your settlement amount. This amount won’t include any remaining interest that you would have paid if you carried on with your agreement. This is known as an interest rebate. The amount of interest that you get back depends on where you are in the agreement.
Yes, you can. If you want to do this, it’s known as exercising your voluntary termination rights.
You'll need to make any remaining payments that are due up to this point. If the amount you’ve already paid for the car (including the deposit) is less than half the total amount payable, then you’ll need to make an additional payment to pay off the difference.
There may be extra charges if the car is not in good mechanical and cosmetic condition and is outside of reasonable wear and tear.
If you haven't paid half of the outstanding amount and you’re experiencing financial hardship at any point during your agreement, some lenders may offer financial assistance.
When you apply for a HP agreement, a hard credit check is completed which can have an impact on your credit score. The lender reviews your credit report to help make a decision on your finance application.
You can see your likelihood of being accepted before you apply by using our car finance eligibility checker.
To complete your application, we'll need your personal details, employment details, address history, bank account details and a copy of your photo driving licence.
Some lenders may also ask for information around your financial commitments to help work out whether you can afford the payments and to help maintain your financial wellbeing. This makes sure the lender is lending responsibly.
We've made financing your car nice and simple with our quick, easy and fully online process.
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