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We are a credit broker, not a lender.Rates from 9.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status. Representative example: borrowing £7,000 over 5 years with a representative APR of 21.9%, the annual interest rate of 21.9% (Fixed) and a deposit of £0, the amount payable would be £185.33 per month, with a total cost of credit of£4,119.81 and a total amount payable of £11,119.81. 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 receive a fixed fee commission per finance agreement, or we receive a commission based on a percentage of the total amount of finance taken. This will not affect the interest rate offered or the total amount repayable. Our service is free.
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. Moneyrepublic makes HP finance simple and reliable, helping you get on the road with confidence.
How does hire purchase work?
Hire purchase agreements allow you to pay for a car in instalments over an agreed period of time, usually between 1 to 5 years. Here's how it works in three simple steps:
- You pay an initial deposit, typically 10-20% of the car's value. This secures the hire purchase agreement.
Apply for your loan
- You take ownership of the car immediately and start making monthly payments over the term of the agreement.
Receive the money
- Once you've made all the payments, including any final "balloon" payment, ownership of the car is fully transferred to you.
Pay it back over time
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We work with over 15 lenders offering 100+ HP and PCP deals so that you could have the best offer.
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We are a credit broker not a lenderThese estimates are subject to credit checks, and may change if you do apply for finance.
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| Loan amount | £7,500.00 |
|---|---|
| Length of Loan | 60 months |
| Monthly payment | £0 |
| Interest rate | 14.9% APR |
| Optional final payment | £0 |
| Amount of interest | £0 |
| Total payment | £0 |
Rates from 9.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status.Representative example: borrowing £7,000 over 5 years with a representative APR of 21.9%, the annual interest rate of 21.9% (Fixed) and a deposit of £0, the amount payable would be £185.33 per month, with a total cost of credit of£4,119.81 and a total amount payable of £11,119.81. 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 receive a fixed fee commission per finance agreement, or we receive a commission based on a percentage of the total amount of finance taken. This will not affect the interest rate offered or the total amount repayable. Our service is free.
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.
Comparing HP with other finance options
By providing defined ownership on flexible terms, hire purchase finance stands out as a preferred financing method for many car buyers.
| Finance features: | Hire purchase (HP) | Personal contract purchase (PCP) | Personal loan |
|---|---|---|---|
| Requires initial deposit | Optional | Optional |  |
| Car is yours at the end of the agreement |  | Optional | |
| Fixed monthly payments | | | |
| Optional balloon (final) payment | | | |
| Avoid excess mileage charge | | | |
| Secured against an asset (e.g. a car) | | | |
| Support with vehicle issues | | | |
How to calculate your Hire Purchase (HP)
Calculating your monthly HP payments is easy:
- Start with the car’s total cost (the price before any deposit).
- Decide on your deposit, usually 10-20% of the total. A larger deposit lowers your monthly payments.
- Choose the loan term, from 12 to 60 months. Longer terms mean smaller payments but more interest overall.
- Subtract your deposit from the car’s price to see the amount you’re financing.
- Divide this amount by the number of months in your term for an estimate of monthly payments.
- 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 Moneyrepublic, 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 do you need to be eligible for HP car finance
| To apply for car finance you need to | Requirements |
|---|---|
| Your name | Be aged 18-75 years old |
| Date of birth and nationality | Requires initial deposit |
| Your recent address history | Receive a monthly income of £1,000 or above |
| Tour employment status | |
| Your income and expenses | |
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.
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FAQ's
- How does the interest rate for a Hire Purchase agreement work?Interest is added to the outstanding balance, typically around 8-10% of the original financed amount. This covers the finance company’s costs. Interest reduces over time as you pay down the principal balance. Rates can vary based on your credit history.
- What happens if I fail to keep up with the payments under a Hire Purchase agreement?If you miss payments, the finance company may repossess the car and cancel the agreement, which means any payments made so far won’t be refunded. However, we’re here to help if you’re facing financial difficulties. Contact us immediately if you think you may miss a payment, and we’ll do our best to find a solution.
- Can I cancel an HP agreement before the final payment?Yes, you can choose to pay off your HP agreement early, though fees and remaining interest charges may apply. Review your original agreement to understand any early termination costs. Our team can guide you through your options if you’re considering ending the contract.
- Will I pay more with Hire Purchase than the vehicle is worth?The total payments over an HP term are usually higher than the car’s cash price due to interest. However, monthly payments are manageable, and you’ll fully own the car at the end. Unlike some other finance options, you’ll own an asset by the agreement’s close.
- Can you sell a HP car?To sell a car with outstanding HP finance, you’ll need to pay off the agreement first, either with a lump-sum payment or by refinancing. Until all payments are made, the finance company remains the registered keeper. Our team can discuss your options if you want to sell.
- What if there's a problem with the car?For mechanical issues, contact the dealer as you have rights under the original sale agreement. If you have concerns with the HP finance agreement itself, such as affordability, our team can help find the best solution for your situation.
- Can you modify a car on HP?You’ll need permission from the finance company before making any modifications, like tuning or adding non-standard parts, to a car on HP. Modifying without approval could lead to the car being repossessed.
- Can I pay off my HP early?Yes, you can pay off your HP agreement before the final payment. Keep in mind that interest for the remaining months may still apply. Check your agreement or contact us to understand any early settlement fees.
- Is it easier to get HP than a loan?Yes, it can be easier to get HP car finance compared to a personal loan because HP is secured against the car. If payments stop, the finance company can take the car back. With HP, you can also lower your repayments by putting down a deposit. A personal loan, on the other hand, isn’t secured against the vehicle and doesn’t include a deposit option. This means you may need a higher credit score or a stronger financial history to qualify.
- Do you own the car at the end of HP?Yes, once you’ve made all payments under a hire purchase agreement, the car is yours. Until then, it technically belongs to the finance company. Some lenders may ask for a small 'Option to Purchase' fee to officially transfer the car into your name, but this varies. This fee is usually minimal and simply covers the cost of updating ownership records.
- 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.
- Can Hire Purchase finance deals be risky?Hire purchase can be risky if you take on payments beyond your budget. Missing payments could lead to the car being repossessed and could harm your credit score. Budgeting carefully and ensuring you can meet the monthly payments is key. But HP itself isn’t a risky process—it’s a practical way to afford a car without paying the full amount upfront.