• Hire Purchase (HP) Car Finance Deals for New & Used Vehicles

(HP) Hire Purchase Car Finance Deals for New & Used Vehicles


What is Hire Purchase (HP) Car Finance?

A Hire Purchase agreement, or HP, is a vehicle or car finance arrangement where you pay a relatively low deposit and hire the car with the option to buy it at the end of the contract. HP will be available to most customers - even those with poor credit ratings. This is because the loan is secured against the car, with the vehicle being used as collateral.

Hire Purchase is very similar to a personal loan when you're paying it, as you'll make monthly payments over a time period of between 12 to 60 months, with a fixed interest rate. However, there are two key differences. As the name suggests, you essentially hire the car over the period of the contract and purchase it at the end. Therefore, because you are hiring the car, the finance company owns the car while you're paying the finance off. It is only once you have made all of the payments that ownership is transferred to you.

As previously mentioned, the loan is secured against the car which means that the risk of granting the finance is lower for the lender than it would be with an unsecured personal loan. This also means that if you are unable to keep up with the monthly payments, the car could be taken away by the finance company to help you pay off the debt.

Hire Purchase is ideal if you want to own the car outright at the end of the agreement. It’s also preferential if you like to budget and know the exact payment amount that will be coming out of your account each month. With every Hire Purchase agreement, you must have fully comprehensive insurance.

How do Hire Purchase HP Deals Work?

Before you decide to enter into a Hire Purchase agreement, you should find the car that you want to buy, so that you know the amount you need to borrow. Once you have done this you can:

  1. Choose a deposit that suits your budget. At Wilsons we don't have a minimum deposit amount, meaning that you can choose to put down a deposit of any size. Depending on the car and the deal available, you may also be entitled to receive a deposit contribution to reduce your total borrowing.
  1. Select a comfortable number of instalments and monthly payments. Here you are agreeing on the amount to be borrowed based on the price of the car less your deposit. You will need to decide how much you can afford to pay a month which will determine the length of your agreement. You will pay interest on these payments, but the rate of the representative APR is decided at the start of the agreement and is fixed for the duration of the plan.
  1. At the end of your instalments, you will own the car. You will take full ownership of the car from the finance company. Alternatively, you can part exchange the car, pick a new model and start a new hire purchase agreement, subject to status.

Hire Purchase Loan Example​ - Buying and Payment

To better understand how Hire Purchase agreements work (HP car finance), here is an example:

Let's assume you are buying a car valued at £14,000...

  • You pay a 10% deposit of £1,400 which leaves £12,600 outstanding.
  • You decide to borrow £12,600 over three years.
  • You get a 5% APR deal, meaning that you would make payments of £378 a month.
  • After three years you take ownership of the car by paying the final monthly instalment.

To buy the car you would pay:

  • Deposit: £1,400.
  • Loan: £13,608 (£378 multiplied by 36 months).
  • Total: £15,008.

Important Information to Remember

When it comes to entering a Hire Purchase agreement, it is important to remember that you don't actually own the car until you have made the car's final payment and covered the full cost. This means that you are not allowed to make any modifications, sell the car or get rid of it while your agreement term is still running. 

If you find you're able to pay off your Hire Purchase agreement earlier than planned, you can do so with no penalties or extra charges. Once you're paid up at the end of your agreement or earlier, you take full ownership of the car.

Hire Purchase Cars - Pros

  1. Flexible repayment terms from one to five years to help suit your monthly budget.
  2. No deposit is required and you may be eligible for a dealer deposit contribution.
  3. Fixed interest rates so you know exactly what you're paying every month for the duration of the agreement.
  4. Simple to arrange and understand.

Hire Purchase Cars - Cons

  1. In an HP agreement, you don't own the car until you've made your final payment.
  2. Monthly payments are higher than PCP and leasing deals.
  3. You cannot sell or modify the car over the contract term without the finance company's permission.
  4. If you fail to keep up with payments, the finance company can repossess the car.

Find Out More - Request a Quote

To find out more about your Hire Purchase car options and to choose a new model, please contact our friendly and helpful staff at Wilsons today. To start an application for a hire purchase agreement simply call us and request a quote or enquire and we'll get in touch to give you all the financial details neede. Discover more about our Car Finance Deals here or see what other agreements are possible, such as Personal Contract Hire or Personal Contract Purchase.

Call 01372 736 000 for more information about Hire Purchase Finance or other types of loans.

Transport For London

Cars need to meet minimum emission standards when travelling in the Ultra Low Emission Zone (ULEZ) or the daily charge must be paid.

Minimum emission standards

Petrol: Euro 4
Diesel: Euro 6

The ULEZ will be enforced based on the declared emissions of the vehicle rather than the age. However:

Information from Transport For London

Check this car on the TFL website before purchasing: https://tfl.gov.uk/modes/driving/check-your-vehicle/

All our vehicles are subject to an Admin Fee. Our Admin Fee covers any additional administration needed during your transaction, including a thorough provenance check (HPI Check). The admin fee also includes the cost to fully valet, register and, if necessary, MOT your vehicle (if less than 6 months left of current MOT).

Our administration fee is a variable fee which covers the additional administration needed when transacting with different categories of customers as specified. Retail Customers £199.00 - (Private buyers - NOT an owner, partner or director of a new/used vehicle sales company). Retail Customers using a finance broker outside our official panel of lenders paying funds direct to Wilsons Epsom - £399.00. All fees are inclusive of VAT.