Hire Purchase (HP)

What is Hire Purchase?

Hire Purchase (HP) is a popular option for purchasing a used car. It allows customers to spread the cost of the vehicle over a period of time. The length of the agreement is agreed at the start. Customers can choose any term between 36 and 60 months.

Under an HP agreement, the customer will make payments to the Finance Company over an agreed period of time in order to pay off the total price of the car. At the end of the agreement the final instalment will include an “Option to Purchase Fee” which is usually £1.

Once all payments have been made; ownership of the car passes to the customer.

Advantages of Hire Purchase

Hire purchase is an increasingly popular method of financing for individuals and businesses alike. Thousands of used cars are sold each year using this method of financing. It allows large purchases to be acquired without having to pay the full price up-front, and instead paying with pre-agreed instalments over a period of time.

Interest rates are fixed for the term of the agreement giving customers more control over monthly outgoings and peace of mind that the payments will stay the same for the duration of the agreement.

Disadvantages of Hire Purchase

Hire purchase finance is secured against the car which means ownership of the vehicle only passes to the customer once all payments have been made. Due to the finance being secured against the car if the customer fails to keep up with the repayments the finance company may need to repossess the car.


A Hire Purchase Agreement (HP) is a type of financing that allows customers to purchase a vehicle over an agreed term.

This form of credit offers customers many benefits including fixed monthly payments for peace of mind. Unlike PCP, Hire Purchase does not have a large “Balloon Payment” at the end.

Once all payments; plus the “Option to Purchase Fee” are made, ownership of the vehicle passes to the customer.

You must be at least 18 years old to apply and hold fully comprehensive insurance.

You must be the registered owner of the vehicle and keep the vehicle in your possession for the duration of the agreement.

You cannot obtain finance in your name for another person.