Rates from 8.9% APR. Representative Example: Borrow £12,000 over 5 years with a £0 deposit. Representative 19.5% APR fixed rate. Monthly payment: £304.38. Option to purchase fee £10 payable. Total cost of credit: £6,272.80. Total amount repayable: £18,272.80.
Car Finance 247 Limited is a credit broker, not a lender.
Hire Purchase is a type of car finance loan that lets you spread the cost of buying a car.
An HP loan is secured against the vehicle, so you’ll be effectively hiring the car while you’re paying back the loan but, once you’ve made the last payment and any required ‘Option to Purchase’ fee, it’ll be all yours. You can keep it, sell it, or do whatever else you like with it!
This means you’ll typically have higher monthly payments than you would with other car finance options like PCP, but it’s unlikely that you’ll have any restrictions on how many miles you can drive, and you’ll own the car at the end of your HP agreement.
You might have to pay a deposit – although 0% deposit finance options are available – followed by fixed monthly payments for an agreed loan period.
How much you’ll pay each month will depend on:
Hire Purchase (HP) finance allows you to spread the cost of a car into fixed monthly payments, and you own the car at the end. You may or may not pay a deposit upfront, then repay the remaining balance plus interest over an agreed term, which is typically between two and five years. Here’s a breakdown of how it works:
Stage 1 - Deposit: Your deposit is an upfront payment you put down. The larger your deposit, the less you’ll need to borrow and the lower your monthly payments will be. Putting down a deposit could also help boost your chances of approval, because you won’t need to borrow as much. But, you may also be able to get HP car finance with no deposit if you are eligible.
Stage 2 - Monthly Repayments: With HP, your monthly payments cover the full value of the car, plus interest. HP repayments are usually higher than PCP finance, because you’re paying off the car to own it. PCP repayments just cover the car’s depreciation, not the full cost.
Stage 3 - Ownership: Once you’ve made all your monthly payments and paid the ‘Option to Purchase fee’, the car is yours. The Option to Purchase fee amount varies by lender, so you should check how much this will be before signing your agreement.
How much you’ll pay each month will depend on:
The car you choose – Factors like the car’s make, model, price and age can affect how much you need to borrow and therefore increase your monthly payments.
If you’re looking to buy a car on HP, you’ll need an approval in principle first, but you may still be able to secure a loan even if you have bad or poor credit, subject to status.
HP finance could be available for a wide range of people through our lender panel, subject to status. We can’t guarantee your approval, but we’ll do our best to match you with one of our trusted lenders.
You can apply for HP finance if you:
Vehicle age limits may also apply depending on the lender.
Unsure if you’re eligible? Try not to worry. Apply today - no impact on your credit score. We use a soft search to give you a quote. If you proceed, a hard search will be conducted which may impact your credit score.
Let’s say you’re looking at a car priced at £10,000. You put down a £1,000 deposit, although no deposit options may also be available. This leaves £9,000 to finance over the agreement.
Here’s an illustrative example of what you might pay, based on 19.5% APR (fixed) over a 4-year term:
At the end of the agreement, the total you would have paid is £13,686.80, which includes the £1000 deposit.
Once the final monthly payment is made, the car is yours. There’s no balloon payment, and no mileage concerns to worry about. That simplicity is one of the reasons HP is a popular choice with many people, especially if you know you want to own the car.
| Feature | Hire Purchase (HP) | Personal Contract Purchase (PCP) |
|---|---|---|
| Automatically own the car at the end |  |
 |
| Optional final balloon payment | |
|
| Requires initial deposit | Optional | Optional |
For illustration purposes only. The rate and payment you may be offered will be based on your individual circumstances.
You may be able to get HP car finance with bad credit - and it may be one of the more accessible finance options available to you, however this will be subject to lender credit and affordability checks. While your monthly repayments could be higher than they would be with other finance options, you’ll own the car at the end of your loan term and consistently making your repayments on time could help improve your credit score. At Car Finance 247, we work with a panel of lenders so that we can look to help people with a range of credit histories, including those with a poor credit score. Credit is subject to status.
Choosing between hire purchase and leasing? While we don’t currently offer leasing, that doesn’t mean it isn’t right for you. There are some key differences to weigh up when deciding between the two.
One main difference is ownership. At the end of a HP car finance agreement, you’ll own your car. But with leasing, you never will. If changing cars regularly is more important to you than owning a car, leasing might be a good fit for you because you’re essentially just renting it. Monthly payments could also be lower with leasing, as you’re not paying towards ownership.
On the other hand, leasing agreements often include mileage limits and condition requirements, which you don’t have to worry about with HP finance. If you drive a lot of long distances, a HP could suit you better.
For a full comparison of hire purchase and leasing, including a side-by-side breakdown, see our hire purchase vs leasing guide.
Applying for HP finance through Car Finance 247 could be quick and simple. We’ve streamlined our process to be hassle-free, and if you’re approved our dedicated Account Managers will support you at every stage. Here’s how it works:
We look to find the best rate from our panel of lenders and will offer you the best deal that you’re eligible for. We will be paid a commission for providing our services and this commission may be a fixed amount or a percentage of the amount borrowed. The interest rate you pay is directly linked to the amount you are borrowing and your individual credit status.
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