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What is Hire Purchase (HP) car finance?

Use Hire Purchase (HP) car finance to spread the cost of your car across monthly payments. Once you’re all paid up, the car will be yours

A couple high-fiving after securing Hire Purchase (HP) car finance

Hire Purchase (HP) is a type of car finance that allows you to spread the cost of a vehicle across monthly payments until you eventually own the car.

There’s no large ‘balloon payment’ like with Personal Contract Purchase (PCP) car finance – you'll simply put down your deposit and pay your monthly bill until the cost of the car, as well as the interest, has been fully covered. There is a small ‘option to purchase’ fee that’s included in your final payment, however.

How does Hire Purchase work?

Hire Purchase (HP) splits the cost of your car across monthly payments that can be more manageable than buying a car outright. You’ll start by putting down your deposit and will then commit to monthly payments until the end of your contract.

There will be a small ‘option to purchase’ fee at the end of your contract, which you’ll be made aware of before you sign the agreement. You’ll then be the full owner of your vehicle – congrats!

You can tailor your HP car finance agreement to suit your needs by adjusting your deposit or the length of your contract. The larger the deposit, the smaller your monthly payments will be, while if you spread your payments over a longer term, it will also lower the amounts you’ll have to pay each month.

HP car deals

Depending on the car you’re looking at, there may also be options for low deposit deals. HP is a great choice for anyone wanting to personalise their finance deal and make it fit their budget and lifestyle.

We offer HP car finance on all the cars available on our site. Look through our car finance page and see which type of finance suits your needs.

Advantages of HP car finance

Owning your HP car

At the end of your HP agreement, when you’ve completely paid up, you’ll be the full owner of your vehicle. That means you won’t have to pay a balloon payment to own your car at the end of your contract like PCP or hand your car back like Personal Contract Hire (PCH).

Fixed interest rates for car finance

Your HP deal will have a fixed interest rate for the whole agreement, so you won’t get any unexpected surprises. You’ll know what you’re paying and for how long.

Poor credit history

If you’re somebody who has poor credit history and are worried about getting approved for finance, some lenders may offer HP as the finance is secured against the value of the car. This means that if you’re unable to keep up with your payments, it can take the car back.

No mileage restrictions on HP car finance

There usually won’t be a mileage cap put on your HP deal. That means you won't have the added expense of excess mileage charges or keeping a close eye on your miles.

HP car finance with lower deposits

You’ll usually get the option for a relatively low deposit on HP finance, depending on your lender and the car you pick. You can then boost it up if you fancy lower monthly payments or keep it low if that suits you better.

Car finance

Disadvantages of hire purchase car finance

When will you own your HP finance car?

If owning your car is important to you, it’s important to remember you won't be the full owner until you’re all paid up.

Higher finance payments than PCP or PCH

As you’re paying to eventually own the car, you’ll find that your monthly payments are usually higher than other types of finance. That’s because PCP will need you to make a balloon payment at the end of your contract if you want to keep the car, and PCH requires you to hand the car back.

You’ll need permission to sell or modify your HP car

Across the length of your HP contract, you’ll need to get the lender’s permission if you want to make any changes to the car or sell it on. Bear this in mind before committing to your contract.

HP vs PCP – which car finance option is better for me?

Paying the small ‘option to purchase’ fee at the end of your HP car finance contract puts you as the owner of the car, so it’s a great option if you know you want to keep your car. The monthly payments are usually higher, but it might be worth it if you’re committed to your vehicle.

PCP contracts will need you to pay a final balloon payment at the end of your term to take ownership of the car. You might prefer PCP if you’re unsure whether you want to keep the vehicle, and if you want the lower monthly payments. These lower payments are a result of the balloon payment, so bear in mind you’ll still have to cover that amount if you want to own your PCP car.

How to get the best hire purchase deals

You’ll need to work out how much of a deposit you can put down and whether you’d prefer larger monthly payments and a smaller deposit, or the other way round.

At cinch, all of our cars are given a full inspection before they’re listed, so you know you’ll be getting a brilliant quality car at a great price.

Our HP car finance calculator

Figuring out your finance deal can be tricky, so we’ve got a handy finance calculator ready to help you out. You’ll find our finance calculators when you view a car model on our site, so you’ll just need to put in your deposit amount, your expected mileage, contract length, and an estimate of your credit score.

The calculator will give you quotes for HP and PCP finance, so you’ll be able to compare and see what’s right for you.

Learn more about car finance: