HP Calculator

Good credit
Bad credit
Amount to borrow:
To repay over:
5 Years
Car finance rate XX% APR
Cost of credit £ XXX
Total repayment £ XX,XX.XX
48 monthly payments of
£ 245 /mo

Representative example - Borrowing £5,500 over 4 years with a representative APR of 19.8%, and a deposit of £0, the amount payable would be £162 per month, with a total cost of credit of £2,282 and a total amount payable of £7,782.

Carplus will find the best car loan rate from our panel of lenders and will offer you the best possible deal. We don’t charge fees, but we earn a commission. This does not influence the APR you’re offered in any way.

What is hire purchase?

Hire purchase is a way to finance the buying of a new or used car. Usually, you put down a deposit and then pay the cost of the vehicle in monthly instalments, with the loan secured by the car's collateral. This means you do not own the car until the last payment is made.

If you are thinking about buying a car, you have probably already considered a hire purchase – especially if you do not have enough money for a lump sum payment. If not, let us tell you about this handy option. Concisely, HP car finance is a way to buy a new or used vehicle by paying the amount gradually.

How does Hire Purchase work?


Find a deal

Submit your details and choose from a fantastic range of car finance deals.


Final arrangements

If successful we’ll organise everything with the lender.


Enjoy your new car

All that’s left to do is to enjoy your new car for the duration of your contract.


A hire purchase finance scheme for cars is a loan without an overpayment. It works like this: you pick up your purchase at once while Carplus is paying for it, and then you gradually pay it back to us over an agreed-upon period.

More good news – this scheme works fine even if you have a bad credit history. Here at Carplus, we try to find the best possible deal for every customer.

An example of how HP agreement works

For ease of calculation and a clearer example of how hire purchase car loans works, let us take a round sum. So, you want to buy a car worth £11,000. You can afford to pay a 10% deposit - that is £1,000. Carplus pays the remaining £10,000 for you.

You sign a 60-month contract at 5.9% ARP. So, your monthly payment will be £191. With all the interest and rates, the total amount you end up paying will be £11,460. You pick up the car immediately and can use it directly after the deal is done.

Compare HP finance with other options

Finance features: Hire purchase (HP) Personal contract purchase (PCP) Personal loan
Requires initial deposit Optional Optional
Car is yours at the end of the agreement Optional
Fixed monthly payments
Optional balloon (final) payment
Avoid excess mileage charge
Secured againts an asset (e.g. a car)
Support with vehicle issues

What's the difference between Hire Purchase and a Loan?

The main difference between these financing schemes is who owns the car at the time of payment. With hire purchase car financing, the person who finances the purchase holds the right to use the vehicle until you make the final payment. With a loan, on the other hand, the right to use the car is transferred to you immediately, regardless of the term of the car loan.

Is HP car financing suitable for me?

HP car financing is suitable for you if:

  • You need a car straight away, but you don’t have a lot of money to pay a lump sum;
  • You plan on keeping the same car for a while;
  • You are okay with not owning the vehicle for the time of the contract.

Advantages & disadvantages of HP car finance


  • You can afford a newer, better-equipped car without the high cost.
  • You pay a small amount each month instead of paying a lot of money all at once.
  • Your monthly payments will not change even if bank interest rates go up, which gives you stability.
  • You own the car after the last instalment is paid.
  • You do not have to pay VAT on monthly instalments.


  • Your car acts as collateral for the loan and can be repossessed if you fail to pay.
  • Non-payment or late payments negatively affect your credit rating.
  • You are not a complete owner of the car until you have paid off the loan in full.
  • Your payments will include interest fees, which means the car will cost more than a one-time purchase.

Your rights in an HP agreement

Is there a possibility of your vehicle’s repossessing?

Yes, if you violate the terms of the contract - for example, by not paying on time or not paying at all. If you have paid less than one-third of the purchase price, Carplus can take your car back. If you have paid more than one-third of the purchase price, you must go to court to get your vehicle back.

The car cannot be confiscated from your driveway, regardless of the amount paid. The seized car will most often go on sale, and the proceeds will go to pay off the debt. However, you will still have to repay the debt in full.

Is it possible to cancel the HP agreement before the final payment?

Yes, there is such a possibility. To do this, you must repay 50% of the total amount of financing - this usually happens in the middle of the agreement. If 50% of the total funding has not yet been repaid, you can make up the difference and then terminate the contract.

Why choose Carplus?

  • Every application is treated individually.
  • You have the fairest chance of getting the best possible deal.
  • There is an unbeatable range of loans to choose from.
  • It is easy to find a deal that will suit your budget.
  • We perform HPI checks to ensure your full ownership.


Here, we have summoned the most popular questions about HP finance.

Will bad credit affect your ability to buy a car on Hire Purchase?

No, it will not. The only thing that your bad credit affects is your interest rate. It may be higher if you have a history of delinquent payments or denials of credit.

Can I cancel an HP agreement before the final payment?

Sure, you can do it. However, you still have to pay all the instalments due up to the time you end the agreement.

Will I pay more with Hire Purchase than the vehicle is worth?

Yes, you will. Your payments will include interest fees, which means the car will cost more than a one-time purchase. However, the sum of the overpayment will not be too big.

Can you sell an HP car?

No, you cannot sell an HP car. You can sell a vehicle only if you are the owner of it, while with HP finance, you become an owner only after paying the total amount.

What if there's a problem with the car?

Unfortunately, this happens sometimes, though not very often. If a problem is found in your car that was not caused by you (for example, a factory defect), Carplus will replace the vehicle with another.

Can you modify a car on HP?

No, you cannot. As the car is not owned until the end of the term, you cannot modify it without first seeking the permission of the finance company.

Can I pay off my HP early?

Yes, you can. To do so, please contact any Carplus specialist to create a special agreement for early termination of the contract.

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