HP: pay it down, drive it forever.
Hire Purchase is car finance at its most straightforward. The price is split into fixed monthly payments, and once the final instalment and option-to-purchase fee are paid, legal ownership of the vehicle transfers fully to you (note: the V5C logbook confirms the registered keeper, while legal title transfers upon the final payment). There is no balloon, no counting miles and no surprises.
How it works
Deposit, monthly payments, finished
You put down a deposit, often around 10% and sometimes nothing, then the remaining balance plus interest is divided evenly across your term, which can run from 12 to 60 months.
The lender technically owns the car until the final payment, after which ownership passes to you automatically for a small option to purchase fee, usually about £10.
- A fixed APR means your payment never moves for the whole term.
- No mileage limits, so you can drive as far as you like.
- No charges at the end of the term, because the condition of the car is your business rather than a lender inspection.
Who it suits
Who it suits best
- Big mileage drivers. Commuters and motorway regulars who would blow straight through a PCP mileage cap.
- Long term owners. If you run cars until the wheels beg for mercy, HP nearly always works out cheaper overall than PCP.
- Older cars. Lenders prefer HP on older, higher mileage vehicles where PCP is not offered at all.
- Careful budgeters. You get one fixed number, a definite end date and no decisions to make when it finishes.
Not sure which suits you? See the full PCP vs HP comparison, or just run both through the calculator.
Own the car.
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