Hire Purchase
car finance
Free eligibility check with no impact on the credit score. A full credit check is carried out if you proceed to a formal application.No deposit required.No balloon payment. The car is yours at the end.Hire Purchase (HP) lets you spread a car's price over 12 to 60 months in fixed monthly payments, then own the car after the final instalment. Rates start from 9.9% APR (representative 23.9% APR). At the representative rate, a £7,500 car costs around £234.77 per month over 48 months, with no balloon payment. Car-Finance matches you with up to 15 UK lenders, including specialists for adverse credit, after a soft credit search.
Deposit: optional, with 10 to 20% typically recommended
Term: 12 to 60 months, fixed
Rates: rom 9.9% APR (representative 23.9% APR)
Ownership: the car is yours after the final payment, with no balloon payment
Bad credit: applications from all credit backgrounds considered through specialist lenders
Moneyrepublic Ltd (FRN: 967024) trading as car-finance.co.uk acts as a credit broker, not a lender, regulated as an Appointed Representative of F&I Online Ltd (FCA No. 731217), authorised by the Financial Conduct Authority.
Last Updated: May 2026
How to get HP car finance?
Getting HP car finance through Car-Finance takes three steps, with a same-day decision in most cases.
Apply for a loan
Get approved for an HP finance deal
Drive away the same day
Our Lenders
We work with over 15 lenders offering 100+ HP and PCP deals so that you could have the best offer.
We are credit broker, not a lender.
Use the financial calculator
With the help of the calculator you can roughly estimate possible car loan options.
Finance calculator
- 36 mo
- 42 mo
- 48 mo
- 60 mo
Your estimated examples
Representative example: Borrowing £9,000 over 60 months with a representative APR of 23.9%, monthly payment of £234.61, total cost of credit £5,076.60, total amount payable £14,076.60. Rates from 9.9% APR. We are a credit broker, not a lender.
With the help of the calculator you can roughly estimate possible car loan options.
What is Hire Purchase (HP) and how does it work?
Hire Purchase (HP) is a type of finance that helps you spread the cost of a car into monthly payments. You'll pay a deposit, then cover the remaining cost of the car over an agreed term. The finance provider owns the vehicle during the agreement, but once you've made the final payment and paid the 'option to purchase' fee, the car is yours.
You can use HP to finance the purchase of a new or used car. It's a straightforward plan. You always know what you'll pay each month. But missed payments can have a negative impact on your credit, so it's important to understand your finance contract. At CarFinance, we make it easy to check your options, so you can choose a finance plan that fits your budget.
Comparing Hire Purchase finance with other options
HP differs from PCP, personal loans, and Personal Contract Hire (PCH) on four points: deposit, ownership, payment structure, and final cost.
| Features | Hire purchase (HP) | Personal contract purchase (PCP) | Personal loan | PCH / Leasing |
|---|---|---|---|---|
| Initial deposit | Optional (10–20% recommended) | Optional | Not required | Required (3–6 months as initial rental) |
| Ownership at end | You, after final payment | You, only if balloon paid | You, from day one | Leasing company; car returned |
| Fixed monthly payments | ||||
| Optional balloon (final) payment | optional | Not applicable | ||
| Mileage limits | excess charges apply | excess mileage charges apply | ||
| Secured against the car | Not applicable | |||
| Support with vehicle issues | Not applicable | |||
| Best for | Owning outright | Lower payments and flexibility | Strong-credit buyers | Lower monthly costs without ownership |
HP suits buyers who want to own the car. PCP suits buyers who want lower monthly costs and a return option. PCH treats the car as an operating cost.
How to calculate your Hire Purchase (HP) payments
Five inputs drive HP monthly payments: car price, deposit, term, APR, and any optional fees.
- Start with the car's cash price before deposit.
- Decide on a deposit (typically 10 to 20%). A larger deposit lowers the monthly payment.
- Choose a term between 12 and 60 months. A longer term lowers the monthly payment but raises total interest.
- Subtract the deposit to find the financed amount.
- Apply the APR to the financed amount over the term.
- Add from 8.9% APR (representative 14.9% APR).
Rates start from 9.9% APR, with 23.9% APR representative on the Car-Finance lender panel.
Based on a £15,000 car with a 10% deposit over 48 months at a representative 14.9% APR.
Total payable includes interest, the option-to-purchase fee, and any documentation fees. The actual rate depends on credit profile, deposit, and chosen lender.
Rates from 9.9% APR. We are a credit broker, not a lender.
Can you get Hire Purchase with bad credit?
Sure you can, because bad credit doesn't have to stop you from getting a car you need. This type of car finance is often more flexible because the loan is secured against the car, which gives the finance lender added reassurance. So even if your credit history isn't excellent or good, you still have a real chance of approval.
If you pay on time, it can even help improve your credit. At CarFinance, we work with trusted lenders to help you find a suitable finance agreement. Try our car finance calculator to see what a car on HP finance could look like for your budget.
Will the monthly repayments be higher with bad credit?
If you have bad credit, your monthly repayments will likely be higher. The finance lender charges more to cover the risk linked to a lower credit rating. But the difference is often small, sometimes less than £20 a month.
We'll always show you the full cost upfront, including the impact on the total cost of credit. And you can use our car finance calculator to see how different credit profiles affect your finance agreement before you apply.
Do you need a deposit to buy a car on HP with bad credit?
A deposit isn't always required. Where possible, we recommend putting down 10–20% — it reduces your monthly payments and the total interest you pay. It shows the finance lender you're serious and helps lower the total cost of credit over your contract.
But not everyone has money saved. If you've got a steady income, we can often help arrange hire purchase car finance with no upfront payment. At Car-finance, we'll look at your situation and match you with a car finance deal that fits.
What do you need to apply for Hire Purchase car finance
Information required
- Full name, date of birth, and nationality
- Address history covering the last three years
- Employment status and current employer details
- Monthly income and main expenses for affordability assessment
Eligibility requirements
- Age: 18 to 79 (varies by lender)
- Residency: UK resident with at least 3 years of UK address history
- Income: monthly income of £1,000 or above
- Deposit: optional, with 10 to 20% typically recommended
- Self-employed and freelancers: accepted, with 3 months of bank statements or an SA302 as proof of income
Applicants outside these criteria can still apply, since some lenders accept lower minimum incomes or shorter UK residency case-by-case.
What happens at the end of the Hire Purchase agreement?
At the end of your car finance agreement, you'll make a small final payment ('option to purchase' fee). This covers the admin cost to transfer the car into your name. From that point, it's fully yours. You can sell the car, change your car, or simply keep it. You no longer need permission to make changes or decisions about the vehicle.
Can you end an HP agreement early? (voluntary termination)
Voluntary Termination (VT) is a statutory right under Section 99 of the Consumer Credit Act 1974. It lets you end an HP agreement once at least 50% of the total payable has been paid, including deposit, monthly payments, interest, and fees.
This is often called the "half rule" or half-rule car finance. To use it, notify the lender in writing and return the car in reasonable condition. No early-repayment charges apply once the 50% threshold is reached. If less than 50% has been paid, you can pay the shortfall and then terminate.
VT does not automatically damage the credit file. Lenders may record the agreement as "voluntarily terminated", a distinct entry from "default". The Financial Ombudsman Service handles disputes over damage fees.
Were you mis-sold HP car finance? What the FCA compensation scheme means
The FCA motor finance redress scheme covers HP and PCP agreements taken out between 6 April 2007 and 1 November 2024 where a Discretionary Commission Arrangement (DCA) or other undisclosed commission inflated the rate. The Financial Conduct Authority confirmed the scheme on 30 March 2026, with implementation from 30 June 2026 (FCA, 2026).
A DCA let the dealer or broker set the rate within a lender-agreed range and earn higher commission for raising it. The FCA banned DCAs on 28 January 2021. The Court of Appeal ruled in 2024 that undisclosed commission breached consumer protection rules, and the Supreme Court confirmed elements of that decision in Johnson v FirstRand (UKSC 33, August 2025).
Who qualifies and timeline
The scheme covers around 12.1 million regulated motor finance agreements per FCA estimates. HP, PCP, and Conditional Sale agreements qualify. Personal Contract Hire and leasing do not.
- 30 June 2026: Scheme 2 begins for agreements from 1 April 2014 onwards
- 31 August 2026: Scheme 1 begins for agreements from 6 April 2007 to 31 March 2014
- 31 August 2027: final deadline to submit a complaint
The FCA estimates an average payout of around £830 per agreement, with total redress of approximately £7.5 billion. Payouts vary by loan size, commission paid, and disclosure status.
What to do
Complain directly to the original lender, free of charge. Claims management companies are not necessary, and the FCA has warned that some firms charge over 30% of any payout for work you can do for free. If the lender rejects the complaint, escalate to the Financial Ombudsman Service. Check eligibility on the FCA's official motor finance complaints page before paying anyone for help.
Advantages and disadvantages of HP car finance
Benefits:
- You get the car straight away and pay for it over time.
- Only a deposit is needed upfront..
- Fixed monthly payments help with budgeting.
- You choose the repayment term (12 to 60 months).
- No large final balloon payment at the end.
- You gain full car ownership once all payments are made.
- Suitable for buying a used car or a new one.
- Can improve your credit rating if you pay on time.
Disadvantages:
- You won’t own the car until the final payment is made.
- The finance company can take the car back if you miss payments.
- Total repayments will usually exceed the value of the car due to interest.
- Early repayment may include extra charges.
- You need the permission of the finance provider to modify or sell the car during the term.
- You may face fees for damage or high mileage.
- Missed payments can affect your credit.
Is HP car finance suitable for you?
HP suits a UK driver who wants to own the car at the end of the term and prefers fixed monthly payments. HP is a strong fit in seven situations.
- Lower payments than an unsecured loan. Because HP is secured against the car, lenders accept lower rates, especially for mid-tier credit profiles.
- No cash to buy outright. Spreading the cost over 12 to 60 months frees up working capital while putting you on a clear path to ownership.
- Ownership preferred over leasing. Unlike PCH, HP ends with the car in your name, with no return inspection or excess-mileage charge.
- Steady income but a smaller deposit budget. Many lenders allow agreements with no deposit, provided affordability is met.
- Self-employed or freelance income. Lenders accept 3 months of bank statements or an SA302, so contractors are not penalised for non-PAYE income.
- First-time buyer or pensioner up to 79. Most panel lenders cover the full age range, including drivers with no prior credit agreements.
- Adverse credit history. Specialist lenders work with CCJs, IVAs, and recent defaults, since the vehicle's security reduces their risk.
Speak to our car finance experts to find out if a hire purchase plan matches your budget and ownership goals.
Why choose us?
We offer many favourable car loan options for your needs and select the best deals from reliable providers
Get your car finance online
Eligibility runs through a soft credit search that leaves no mark on the credit file. A full credit check is carried out if you proceed to a formal application.
Buy a car from any UK dealer
Finance works at any FCA-registered dealer, with access to over 100,000 vehicles. Some brokers limit finance to a verified network. We do not.
Car finance quality assured
Every financed car passes an HPI check screening for outstanding finance, write-off history, mileage discrepancies, and MOT history before signing.
15+ UK lenders compared
We compare deals from 15+ UK lenders, including Moneybarn, Zopa, Close Brothers, Moneyway, and V12 Vehicle Finance.
FCA authorised: free service
Car-Finance is an Appointed Representative of F&I Online Ltd (FCA No. 731217). The service is free; lender commissions do not affect the rate.
Same-day decision
Most applicants receive a decision the same day. Once approved, the car can usually be collected or delivered within 24 to 48 hours.
Apply for HP Car Finance
Check eligibility in minutes with no impact on the credit score. A full credit check is carried out if you proceed to a formal application.
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FAQ
We've collected the most popular questions about car loans from our customers.
Can I get car finance with bad credit?
Yes, it's possible to get car finance with bad credit, with a common representative APR of 19.9%. Car-Finance works with a network of lenders, including specialists in car finance for those with bad credit. Even if you've had difficulties with repayments in the past or have a limited credit history, we can help match you with a car loan that suits your needs. However, finance is subject to status, and your eligibility will depend on the lender's assessment of your individual circumstances.
Does applying for car finance affect my credit score?
Applying with Car-Finance uses a soft credit search, which does not affect your credit score. You only get a hard search when you formally accept a finance offer.
How quickly can I get approved for car finance?
Many of our customers receive a decision in minutes. Once approved, you can choose your car and drive away the same day.
How does the interest rate for a Hire Purchase agreement work?
The rate is fixed for the full term and applied to the financed amount after deposit. Rates start from 9.9% APR with 23.9% APR representative. The offered rate depends on credit profile, deposit, term, and lender.
What happens if you fail to keep up with HP payments?
A missed payment can trigger a default notice after 14 days, then repossession under the Consumer Credit Act 1974. A default damages the credit file for six years. Contacting the lender early usually leads to a payment plan.
Can you cancel an HP agreement before the final payment?
Yes, through Voluntary Termination, once at least 50% of the total payable has been paid (Section 99, Consumer Credit Act 1974). Notify the lender in writing and return the car in reasonable condition.
Will you pay more with Hire Purchase than the vehicle is worth?
Yes. Total HP repayments exceed the cash price because interest accrues. A £15,000 car at 23.9% APR over 48 months totals around £16,752. A larger deposit and shorter term lower the gap.
Can you sell an HP car?
Not until the final payment and option-to-purchase fee have cleared, since the lender owns the car. To sell early, request a settlement figure and settle the agreement.
What if there's a problem with the car?
The primary remedy is against the dealer under the Consumer Rights Act 2015. The lender shares liability under Section 75 of the Consumer Credit Act 1974, for cash prices between £100 and £30,000.
Can you modify a car on HP?
Modifications require written permission. Cosmetic changes such as wheel swaps are usually approved. Mechanical or structural changes are often refused since they affect resale value.
Can you pay off HP early?
Yes. Request a settlement figure at any point. The figure is calculated under the Consumer Credit (Early Settlement) Regulations 2004 and reflects the outstanding balance plus a statutory rebate of unearned interest.
Is it easier to get HP than a personal loan?
Often yes, because HP is secured against the car. Subprime lenders accept HP applications from borrowers who would not qualify for an unsecured loan at the same rate.
Do you own the car at the end of HP?
Yes, once the final payment and option-to-purchase fee have cleared. The lender then transfers the title. No balloon payment applies, unlike PCP.
Can hire purchase finance deals be risky?
HP carries the same baseline risk as any secured loan. Missed payments can lead to repossession and damage the credit file. The product is FCA-regulated, with mandatory affordability checks.
Is HP car finance included in the FCA redress scheme?
Yes. The scheme covers HP agreements taken out between 6 April 2007 and 1 November 2024 where a Discretionary Commission Arrangement or other undisclosed commission was used. Lenders contact eligible customers from 30 June 2026.
What consumer protection do you have under section 75 of the Consumer Credit Act?
Section 75 makes the lender jointly liable with the dealer for misrepresentation or breach of contract on cash prices between £100 and £30,000. You can claim against the lender directly when the dealer fails to resolve the issue.
Can You Get HP Car Finance if You're Self-Employed or a Freelancer?