Hire Purchase or HP is available to both private buyers and companies who are looking to purchase a car and own it outright. A finance agreement like HP allows you break down the vehicle’s cost into affordable fixed monthly payments. You are eligible to apply for a hire purchase loan if you’re over 18 years old and have a minimum of three years’ address history in the UK.

The Option to Purchase fee is an amount of money that you may need to pay at the end of your hire purchase agreement to cover admin costs and officially become the car’s owner. This is typically a much lower amount than a balloon payment would be with a PCP agreement.

If you can’t afford your HP repayments and you have already repaid 50% of the total amount payable, then you have the right to voluntarily terminate your agreement and hand the car back. The total amount payable doesn’t just mean the amount you’ve borrowed, it also includes any fees or interest. If you want to keep your car, you may be able to reduce your monthly payment amount by applying for a refinance loan. When you refinance, you take out a new finance agreement, usually with a new lender, to pay the balance on an existing hire purchase loan. You might be able to swap to a loan with cheaper monthly repayments and a longer repayment period instead.

HP finance can be easy or hard to get depending on your credit score and financial situation. If you have a good credit history and stable income, you'll likely find it easier to get approved for HP. If your credit score is low, it might be more challenging, but here at CarFinance247 we work with lenders who can help people with lower credit scores get accepted for HP finance. Simply enter your monthly budget and click ‘Get a quote’ and we’ll help you with the rest.

At the end of a hire purchase agreement, you make a final payment and take ownership of the car. Sometimes, this final payment is called an "option to purchase" fee, and it covers the cost of the admin it takes to move the car officially into your name. Don’t worry, it’s usually a very small amount.

People choose hire purchase because it allows them to spread the cost of a car over time, making it more affordable. HP agreements may also offer flexibility with deposit and payment terms, so you can usually get an agreement that fits best with your budget and financial needs.