What is hire purchase?

Hire Purchase (or HP, for short) is a flexible finance option designed to help you purchase a car via monthly instalments. Once you’ve paid your final instalment, you’ll own the car.

How does it work?

When you enter into a Hire Purchase Agreement, you'll pay an initial deposit for the car followed by monthly payments across over a number of months (usually between 12 and 60) agreed by you and one of our trusted lenders. It is worth noting that the size of the deposit you put towards the deal will affect the amount you pay back each month - the greater the deposit, the lower the monthly repayments.

You won’t own the car until you pay your final monthly instalment and an Option to Purchase Fee of £10. This fee covers the cost of transferring the ownership from the finance company to you. After that, the car is all yours.

What happens at the end of my HP agreement?

If you've paid all of your monthly instalments and your Option to Purchase Fee (£10) then there is nothing else to do - the car is yours!

Pros and cons

HP is a great option if you are looking to purchase a car you wouldn't otherwise be able to in an up-front, one-off payment. You don’t have to worry about exceeding any annual mileage caps or fines for excessive wear and tear to the car because you will become the legal owner of it.

Remember, the car is owned by the finance company until the option to purchase fee has been paid. Until then you do not have the legal right to sell the car and the finance company have the right to seize the car if you do not keep up with your payments. Your finance company may allow you to sell the car before the end of the contract, however, only if the sale were to go towards the settlement of the finance.

Here’s a few quick pros and cons to help you choose if HP is right for you:

Hire Purchase

Pros

Cons

You are paying towards owning the car at the end of your agreement.

You don’t have to worry about annual mileage caps or wear and tear on the car.

You can contribute a higher deposit to lower the monthly repayments.

You’re paying for the total cost of the car over the course of your agreement

You will only own the car once you have paid the final agreed instalment.

You are likely to pay more back each month than on a PCP plan.