Hire Purchase Car Finance

What is Hire Purchase?

Hire purchase, also known as HP, is one of the most common ways to finance a vehicle. Under a hire purchase agreement, you pay fixed monthly instalments over a set period of time. Your payments will include interest, which is typically charged monthly. Once all payments have been made, you become the legal owner of the vehicle.

For many UK drivers, hire purchase finance provides a clear path to vehicle ownership, unlike leasing or PCP financing options, where ownership is not always possible. With HP, you can spread the full cost of your chosen vehicle, so there's no need to pay the total price upfront.

At Autodosh, we act as a credit broker, not a lender. We work with a panel of trusted lenders who may help you find the right financing option to suit your individual circumstances. Lenders may consider applicants from a range of credit backgrounds, but approval is not guaranteed, and lenders will go through affordability checks.

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How does Hire Purchase (HP) work?

Understanding how HP car finance works is important before making any decisions. The process is simple:

Choose your vehicle

Select a vehicle from a reputable dealership.

Deposit payment

Some lenders may require an initial deposit.

Monthly payments

Make regular payments over a set term.

Ownership

After the final payment, the vehicle is yours!

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Buying a Vehicle with Hire Purchase

Buying a car through a hire purchase contract may suit people who want long-term ownership. At the end of your agreement, there is no large 'balloon' payment as there is with PCP, ownership is automatically transferred to you. This option might be appealing for people who want to keep their vehicle for a long time.

If you're looking for car financing alternatives, you might also consider:

PCP finance
Leasing

Hire Purchase Advantages and Disadvantages

HP finance means fixed monthly payments, which could be helpful for budgeting. You will know from the start of your term what your instalments are, so there are no surprises. However, a hire purchase deal might not be a suitable option for everyone, so always do your own independent research before committing to a finance agreement.

Advantages of Hire Purchase

Eventual ownership.
No large final payment.
Flexibility.
Used cars included.
Budgeting clarity.

Disadvantages of Hire Purchase

Ownership delayed.
Potentially higher overall cost.
Repossession risk.
Limited flexibility to change vehicles.
Early settlement fees.

HP vs Other Types of Car Financing Options

While hire purchase is a common choice for UK customers, there may be better-suited options available to you. There are pros and cons to each option, but ultimately only you can decide what works best for your financial situation.

Hire Purchase vs PCP

Personal Contract Purchase (PCP) is similar to Hire Purchase (HP) in that you have fixed monthly repayments. However, with PCP, to keep the vehicle at the end, you will need to make one larger final 'balloon' payment. You also have the option to either return the car or part-exchange it.

Hire Purchase vs Leasing

Leasing is essentially a way to hire a vehicle long-term. Just like with PCP and HP, you will make agreed-upon monthly payments. However, you will not own the car at the end of your lease, and you won't have the option to buy it. If you don't have any ownership concerns, then leasing may be the option for you.

Hire Purchase vs Personal Loan

A personal loan is another way to finance a vehicle. You will also pay the full total cost back in monthly instalments, but with this option, you will have ownership from the start. While we don't work with many lenders who offer this option, you could potentially secure a personal loan through your bank.

Apply For HP Finance

Ready to explore your hire purchase options? Apply for finance today, and we'll see if we can match you with one of our trusted lenders. All finance is subject to status, and lender terms and conditions apply.

Our team is available to answer any questions you might have about the application process. For more loan-specific information, your lender should have the answers you need.

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Apply now Rates from 9.9% APR. Representative APR 24.9%. Autodosh is a credit broker, not a lender.