How Hire Purchase Works

Purchasing a new car – be that brand new from a main dealer or second hand – is one of the biggest expenses you are likely to make but can also be one of the most confusing.

That’s because of the various different ways in which you can look to finance the purchase, ranging from an outright cash deal to Contract Hire, or Hire Purchase.

Aside from an outright cash deal, arguably the most popular form of car finance is Hire Purchase, which provides the opportunity to own the car at the end of your finance deal and avoids the mileage limitations that can often be found on a Contract Hire agreement.

A Hire Purchase agreement can be structured in a variety of ways, with the team here at Find Me Car Finance being specialists in helping to secure you the best deal possible from our panel of lenders and broker.

In simple terms, a Hire Purchase deal involves putting down a deposit (however, some lenders now also offer a no deposit option) on the car of your choice with the remainder of the purchase price then being paid off in a series of installments across an agreed period of time. 

Unlike some other deals, HP removes the need for a lump sum payment at the end of the agreement, although it should be noted that you won’t own the car until the final payment on it has been made.

The way in which a HP deal is structured means they can be suitable for a range of different people, with the option to pay a larger deposit on the car thereby reducing the amount of finance required and the resultant monthly payments.

Those with less or no money to put down at the start of the deal could instead seek to increase the amount of finance, with the car acting as collateral against the loan.

The fixed nature of payments mean you’ll always know how much you are paying on a monthly basis, and makes it easier to see exactly how much your finance deal is costing.

You may also be able to return a car early on a HP deal once you have paid more than half of the cost, something our expert team will be happy to explain to you in full.