Hire Purchase (HP) Car Finance
What’s your monthly budget?
Rates from 9.9% APR. Representative APR 13.9%. We are a credit broker, not a lender.
Representative example: Borrowing £7,500 over 60 months with a representative APR of 13.9%, flat rate of 7.25% and deposit of £0.00, the amount payable is £170.98 per month, with a total cost of £2758.68 and a total amount payable of £10,258.80.
Build toward ownership with hire purchase
If you want to spread the cost of ownership over a few years, a hire purchase (HP) agreement could be the way to go. Get started with our full HP car finance range below.
What is hire purchase?
Hire purchase (HP) is a method of financing a new or used car, like personal contract purchase (PCP) or personal contract hire (PCH). The main difference with a hire purchase agreement is that you will own the car at the end of the deal, unlike PCP, where you have the option to own the car or not, or PCH, where you give the car back.
In a typical hire purchase deal, you’ll pay an initial deposit followed by fixed monthly payments until the end of the contract. Once you’ve made that final monthly payment (plus a small additional payment known as an option to purchase (OTP) fee), the car is yours. That’s why it’s called hire purchase – you’re essentially hiring the car until you buy it outright at the end.
How does hire purchase work?
Your standard hire purchase deal can be broken down into three parts:
Initial payment
This is the amount you’ll pay at the beginning of the deal. The good news is it’s adjustable – you can pay more upfront to make your monthly payments lower or pay less upfront and spread the cost over higher monthly payment amounts.
Monthly payments
You’ll pay a fixed amount every month for the duration of your contract, with most hire purchase deals lasting two to four years. The total of your monthly payments covers the value of the vehicle plus whatever interest has been added to your deal.
Option to purchase fee
This is a small payment that’s more of a formality than a meaningful cost. Paying the option to purchase (OTP) fee transfers ownership of the car from the lender to you. There’s no big final payment to worry about like there is with PCP. Once you’ve paid your final monthly payment plus the OTP fee, the car is yours.
The bits you’re in control of with a hire purchase deal are:
The car
- Choose from over 1,000 used vehicles in stock today – or ask our team to source one for you.
Deposit amount
- Manage your initial payment based on what suits you best.
Contract length
- Pick a contract length that works for you and your budget.
Advantages of hire purchase
Getting a car on hire purchase could be perfect solution for you, but like any method of car financing, it has its pros and cons versus other options. If you’re not sure what would work best, speak to a member of our team who’ll be happy to help you figure it out.
Break down the cost of ownership
If you know you want to own the car but can’t afford to buy it outright, a hire purchase deal enables you to spread the cost of the purchase.
Get a better car on your budget
Because the cost of buying is spread over manageable monthly payments, you might find you can afford a newer or higher-spec car.
Know what you're getting
Hire purchase deals are simple – the same fixed cost every month, with ownership guaranteed once you’ve paid off the contract in full.
No big final payment
There’s no big final balloon payment to worry about with hire purchase like there is with PCP. Your hire purchase deal completes with your final monthly payment and a small option to purchase fee.
Limited restrictions
Hire purchase deals don’t have the same mileage and condition restrictions as lease (PCH) or PCP contracts.
Disadvantages of hire purchase car finance
- Monthly payments higher than other options
Because hire purchase deals spread the full purchase cost across the monthly payments, they’re usually higher than you’d pay with an equivalent PCP (where most of the cost is left for the final balloon payment) or PCH (which carries a lower overall cost because it’s a lease).
- You don't own the car until the end of the deal
The car only becomes yours after you’ve made the final payment, so if you want to own the car (and have the option to sell or modify it) straight away, you’ll need to buy it outright.
- Commitment to the full contract
You’re paying to take ownership of the vehicle from the start of the deal, so you need to be sure you want to own the vehicle at the end of the contract.
Why choose a hire purchase deal with Hippo Finance?
- We're zero-deposit and bad credit specialists
As zero deposit and bad credit specialists, we work with those that others won’t. So, if you’re worried about your credit affecting your ability to get a HP car finance deal, we’ll do our best to help you.
- You can get an approval decision in minutes
You can find out today if you’re eligible for finance with us with our free credit check. You can get an approval decision in minutes*, with no impact on your credit score.*
- Peace of mind with our Used Car Promise
Our Used Car Promise ensures you’re getting a quality second-hand car, with a 3-month warranty and minimum 6-month MOT included with every vehicle.
- Same-day collection and nationwide delivery
With over 1,000 used vehicles in stock, you can drive away today with same-day collection or stay at home with fast UK delivery to your driveway.
- Dedicated account support
We offer a simple end-to-end service that handles every element of your hire purchase deal. A dedicated account manager will work with you to find a car and finance plan that suits you. That’s why we’re rated ‘Excellent’ on Trustpilot.
Hire purchase FAQs
What’s the difference between hire purchase and personal contract purchase (PCP)?
The main difference between hire purchase and PCP surrounds ownership of the vehicle at the end of the contract. With a hire purchase deal, you’re committed to taking ownership of the car and will do so once you’ve made the final payment. With PCP, you have three options:
- Take ownership of the car by paying an optional lump sum payment known as the balloon payment. The balloon payment is substantial – often around half of the entire cost of the contract – but only has to be paid if you want to keep the vehicle and take ownership of it.
- If you have positive equity in the vehicle (meaning its current value is worth more than you have left to pay on the deal), you can use that equity as trade-in value as a part exchange on a new deal.
- You can give the car back and walk away from the deal.
HP and PCP deals are also different in how they’re put together. A hire purchase deal spreads the entire cost of purchase out across the deposit and monthly payments, while a typical PCP deal backloads the contract, leaving up to half of the total cost for the optional balloon payment. With this in mind, there are a few other differences to note:
- HP typically carries higher monthly payments than PCP.
- PCP deals come with mileage and condition restrictions that aren’t typically present on a HP deal.
- PCP deals have more flexibility at the end of the contract
What's the difference between hire purchase and personal contract hire (PCH)?
Again the difference comes down to ownership of the vehicle. PCH is purely a type of lease deal. With PCH, you are renting the car with no ownership option, meaning you hand the car back at the end, no matter what. With hire purchase, you’re legally committed to taking ownership of the vehicle and will do so once you’ve made your final monthly payment.
So, they’re effectively at opposite ends of the ownership spectrum, with PCP somewhere in between. The other main differences between HP and PCH are:
- PCH monthly payments are typically the lowest of the three main financing options. This is because you’re only paying to lease the vehicle rather than take ownership of it. HP monthly payments are typically the highest of the three.
- Mileage and condition restrictions are strict with PCH deals, whereas you’ll find little to no limits in a HP contract.