HP
car finance

Hire Purchase (HP) car finance is an easy way to pay for a new car over time. With a low deposit and fixed monthly payments, you can drive off in a car you love without paying the full price upfront. CarFinance makes HP finance simple and reliable, helping you get on the road with confidence.

What is Hire Purchase?

Hire Purchase (HP) is a type of car finance that lets you spread the cost of buying a car over time. The loan is secured against the car, so you’re hiring it while you make your payments. Once you’ve made the final payment and paid a small fee, the car is yours to keep, sell, or give away.

With HP, your monthly payments are often higher than with other finance options, like PCP, but there are no limits on how far you can drive. HP may require a deposit, usually around 10-20%, followed by fixed monthly payments for an agreed period. Some 0% deposit options are available too.

How does HP finance work?

Hire Purchase (HP) finance lets you buy a car by spreading the cost over monthly payments. The loan covers the car’s price minus any deposit, which you’ll repay with interest over one to five years. After the final payment and a small “Option to Purchase” fee, the car is fully yours.

To get HP finance, you’ll need to pass a credit check, but it’s possible to qualify even with poor credit.

How to calculate your Hire Purchase (HP)

Calculating your monthly HP payments is easy:

1. Start with the car’s total cost (the price before any deposit).
2. Decide on your deposit, usually 10-20% of the total. A larger deposit lowers your monthly payments.
3. Choose the loan term, from 12 to 60 months. Longer terms mean smaller payments but more interest overall.
4. Subtract your deposit from the car’s price to see the amount you’re financing.
5. Divide this amount by the number of months in your term for an estimate of monthly payments.
6. Add interest, typically around 8-10% of the financed amount, for a more accurate monthly payment.

Can you get Hire Purchase with bad credit?

Yes, you can get HP car finance even with bad credit. HP may be one of the more accessible finance options if your credit is less than perfect. While your monthly payments might be a bit higher, you’ll own the car once the loan is fully paid. Making your payments on time can also help improve your credit score. At CarFinance, we work with multiple lenders to help people with different credit histories, including those with poor credit.

Will my monthly repayments be higher if I have bad credit?

If you have bad credit, your monthly payments might be a bit higher to cover the extra risk. For most people, this increase is small—usually under £20 more each month. We’ll be upfront about any differences in rates based on credit.

Do I need a deposit to buy a car on Hire Purchase with bad credit?

Most lenders require a deposit of 10-20%, even with bad credit, as it shows commitment. But if you have a steady income, we can sometimes arrange HP finance without a deposit.

What happens at the end of the Hire Purchase agreement?

At the end of a hire purchase agreement, you make a final payment and become the car’s owner. This last payment, sometimes called an "Option to Purchase" fee, covers the admin costs to transfer the car into your name. It’s usually a small amount, so no need to worry.

Advantages & disadvantages of HP car finance

Hire purchase offers these key benefits:

Benefits:

• Get the car now and pay it off over time to own it.
• Monthly payments are often lower than with other finance options.
• Only a deposit is needed upfront, not the full car price.
• You can choose to repay over 12 to 60 months.
• You won’t fully own the car until all payments are made.
• Monthly payments stay the same throughout the term.
• Extra fees may apply for high mileage or damage.
• Paying off early might come with extra charges.

Things to consider:

• Get the car now and pay it off over time to own it.
• Monthly payments are often lower than with other finance options.
• Only a deposit is needed upfront, not the full car price.
• You can choose to repay over 12 to 60 months.
• You won’t fully own the car until all payments are made.
• Monthly payments stay the same throughout the term.
• Extra fees may apply for high mileage or damage.
• Paying off early might come with extra charges.

Is HP car finance suitable for me?

HP car finance works well if you:

• Want lower monthly payments than other options
• Don’t have the cash to buy a car outright
• Prefer owning the car instead of leasing
• Have steady income but less saved up for a big deposit
• Need flexibility in your payment schedule and loan term

Speak to our car finance experts to find out if a hire purchase plan matches your budget and ownership goals.