Hire Purchase (HP) Information

If you are looking for a very straightforward way to buy a car, then Hire Purchase (HP) is a very accessible method. The essential difference between this and either PCP or PCH is that you will fully own the car at the end of the agreement upon payment of the final balance. These contracts are uncomplicated, can be quickly organised and can be set up through most car dealerships.

In essence, a Hire Purchase agreement gives the buyer an option to buy the car at the end of the agreement period. Normally set up on a fixed contract basis, meaning that APR (Annual Percentage Rate) is established before the contract starts to run. This approach is therefore particularly useful when planning a budget. The period of the loan is also fixed – running in most cases for periods of three to four years respectively – and the finance agreement is secured against the car being bought.

If you are the official registered keeper of the car you will also have additional responsibilities. Ensuring the car is insured and maintained (and where appropriate obtaining an MOT document) is essential. Be aware however the finance company is the legal owner until the full amount borrowed has been fully repaid.

What are the benefits of Hire Purchase?

• Easy to arrange in the car dealership and generally processed quickly.
• You will have rights and protections under law as credit agreements are fully regulated.
• The deposit paid at the start of the agreement can be low.
• There is a choice of flexible payment periods – these are normally anytime between 1-5 years.
• Monthly repayments are fixed at the same amount throughout the agreement.

 

Things to remember

• Ownership is not legally transferred until the end of the term which means it cannot be sold or modified without the permission of the finance company.
• Under the Conditional Sale agreement, ownership of the car will transfer automatically as soon as the final repayment is made. This means no further action on your part is required.

Frequently asked questions

What is Hire Purchase (HP)? 

Hire Purchase is often abbreviated to “HP”. Car hire purchase is a straightforward way to finance your next new or used car. You normally pay a deposit and hire the car, paying monthly, with the option to purchase the vehicle at the end of the agreed contract. 

This tends to be set up on a fixed contract basis where an annual percentage rate (APR) and the duration of the loan is outlined prior to the beginning of the contract. Meaning you do not own the vehicle until the last payment is made.

How does Hire Purchase work?

When you have chosen your car and financing method, you will begin by putting down a deposit on the vehicle you want to purchase. This is normally around 10% or more of the vehicle's value. The remaining value of the car is then paid off in instalments over 12-60 months.

Then you will have a consultation with a specialist to talk through the agreement and ensure this is the best financing option for you.

Next, the Charles Hurst dealership will contact the finance company or broker, and complete the hire purchase application based on the agreed amount. 

Finally, you will be requested to pay the deposit and to start making your agreed monthly payments on the agreed contract start date.

For more information about how HP Finance works, contact our team.

What are the alternatives to hire purchase?

There are several other car financing options available, including:

Personal contract hire
Personal contract purchase
Personal loan
Leasing

For more information about our flexible financing options, contact our team.

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