Hire Purchase (HP)
At CarShop, we have several options available if you'd like to take out car finance. On this page, you'll find more information on one particular type of car finance called Hire Purchase.
What is Hire Purchase (HP) finance?
Getting your car via HP Finance means you can spread the cost of your car over a fixed number of monthly instalments.
While you're paying these agreed amounts, you're free to use the car as much or as little as you wish, and at the end of the agreed term, you become the car's owner.
The length of time you can have a Hire Purchase agreement is between 24 and 60 months.
Finance features
- £1,500 minimum amount financed over a 24 month agreement
- Start with £0 deposit
- At the end of your agreement, you'll own the car
- No sneaky mileage charges
- Fixed monthly payments
To find out whether Hire Purchase finance is for you, use our HP car finance calculator below.
HP finance calculator
By starting a finance check, a 'soft search' against your credit file will be performed, however, this won't be visible to lenders and won't affect their decision.
By starting a finance check you agree that CarShop may/will pass your details on to a third party lender or broker, and they may wish to contact you by phone, post, SMS, or other electronic means.
Car Shops Limited is directly authorised by the Financial Conduct Authority (FCA) with a Limited Permission for credit broking. Our Firm Reference Number (FRN) is 447727. Details of our FCA permissions (and our trading names) can be checked via the FCA register (via this link https://register.fca.org.uk/s/). We are a credit broker and not a lender. To assist you with your vehicle purchase, we can introduce you to two lenders (and their finance products), both of whom we have a pre-existing relationship with (we do not source the whole market). In the event both lenders choose not to provide credit, we will refer you to a broker to attempt to source credit for you. Note however, the available terms from this broker may well be inferior to the two lenders we initially introduced you to. We act as an agent on the lenders behalf when making this introduction. We are not an independent financial advisor and therefore, no advice or recommendation will be made. You must decide whether the finance product you choose is right for you. We do not charge you a fee for this introduction but we will receive a commission from the lenders we work with (either a fixed fee or a fixed percentage of the amount you borrow). The lenders we work with could pay commission at different rates. Some lenders may also provide preferential rates to us for the funding of our vehicle stock and also provide financial support for our training and marketing. For regulated agreements under the Consumer Credit Act 1974, if you would like more information on the commission payable prior to you entering into the agreement, please email your request to fcacomplianceteam@sytner.co.uk. For your reassurance, the amount of commission we receive from a lender does not have an effect on the amount that you pay to that lender under your credit agreement.The lender will always set this. Finance is subject to credit acceptance to UK residents (excluding the Channel Islands) aged 18 or over. All finance is subject to status. Guarantees and indemnities may be required. Terms and conditions apply.
How does Hire Purchase work?
Hire Purchase (HP) works slightly differently to other forms of car finance.
With CarShop, to benefit from a Hire Purchase arrangement you’ll need to complete an application form. Once approved, you can spread the cost of your car over a minimum of 24 months and a maximum of up to five years, with a fixed interest rate and fixed instalments for the full duration of the agreement. Our team will be happy to assist you with this process, either online, over the phone or in store.
It’s important to be aware that for a Hire Purchase agreement, you’ll need a minimum amount financed of £1,500 over 24 months, but the deposit can be as little as £0.
HP vs PCP
Hire Purchase (HP) finance differs from Personal Contract Purchase (PCP) in that you won’t have to estimate how much you’ll be using the car before you can sign for it. This also means that unlike PCP, with Hire Purchase you won’t encounter any charges for going over your mileage allowance. However, with Hire Purchase, you can overpay to lower the payments for the remainder of your term.
Use our finance calculator above to find out whether Hire Purchase is the right finance option for you.
Helpful information
If you choose a Hire Purchase arrangement to finance your car, there are several important factors you must consider:
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You can pay your deposit and car balance online by credit or debit card, or using part exchange of your current car. In store you can pay a max of £500 via credit card. Deposits and balances over £500 can be made via debit card.
Due to Covid-19 we have introduced new measures as part of our commitment to our customers and colleagues safety. This unfortunately means we no longer accept cash payments of any value. - You'll have a fixed rate of interest for the full term of your agreement
- At the end of the term, you'll own the car
- If, for any reason, you don't keep up with your agreed payments, the car may be repossessed. In this scenario, you'll also lose all the money you've spent on it up to that date
- The length of your agreement can vary from a minimum of 24 months, to a maximum of 5 years
- You can't sell the car before the agreement is up without contacting the finance company first to agree on a settlement figure
Hire Purchase car finance FAQs
Getting your car on finance allows you to spread the cost of your car over a minimum term. It can be quite complex, so we've put the most frequently asked questions below.
Does Hire Purchase affect my credit rating?
Hire Purchase arrangements are considered a form of credit and having too many credit arrangements can have a negative impact on your credit rating.
Missing payments on your Hire Purchase arrangement can also negatively impact your rating, just as missing payments on any type of financial commitment can.Can Hire Purchase affect my mortgage?
If you already have a mortgage, it shouldn’t be affected by a Hire Purchase agreement, but if you’re planning on getting a mortgage, a Hire Purchase agreement could affect it.
The agreement is considered like any other type of credit or loan would be when a mortgage provider conducts the standard affordability checks – it’s worth taking this into account if you’re hoping to take out a mortgage during the term of your Hire Purchase agreement.Are there any excess mileage charges with a Hire Purchase Agreement?
No. With a Hire Purchase agreement, you don’t need to set any predicted mileage usage.
This is something you’d encounter with a Personal Contract Purchase (PCP).Can Hire Purchase car finance be paid off early?
Yes, but you may encounter an early termination fee depending on the lender.What is the maximum term length for a Hire Purchase Agreement?
The maximum amount of time a Hire Purchase agreement can be set for is 60 months (five years).What happens if I miss a Hire Purchase payment?
If you can’t keep up with your Hire Purchase agreement payments, the car will likely be repossessed by the lender. You should however be contacted by the lender first, at which point you should be given the option to repay in arrears over time.