What is Hire Purchase?

Hire purchase (HP finance) is a way to finance the purchase 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 finance 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, expensive or cheap vehicle by paying the amount gradually.

HP Calculator

Must be between £3,000 to £50,000
Your monthly payment
Total charge of credit£0
Total amount payable£0
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Rates from 9.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status. Representative example: borrowing £7,000 over 5 years with a representative APR of 21.9%, the annual interest rate of 21.9% (Fixed) and a deposit of £0, the amount payable would be £185.33 per month, with a total cost of credit of£4,119.81 and a total amount payable of £11,119.81. We look to find the best rate from our panel of lenders and will offer you the best deal that you're eligible for. We receive a fixed fee commission per finance agreement, or we receive a commission based on a percentage of the total amount of finance taken. This will not affect the interest rate offered or the total amount repayable. Our service is free.

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  • Representative APR 21.9%

A hire purchase finance scheme for cars is a loan, or finance, 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 a pre-agreed 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 cheap deal for every customer.

How does Hire Purchase work?


Find a cheap deal

Submit your details and choose from a fantastic range of cheap 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, be it cheap or expensive, for the duration of your contract.

An example of how an HP agreement works

Let us take a round sum for ease of calculation and a clearer example of how Hire Purchase car finance works. 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 7.9% APR. 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 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 depositOptionalOptional
Car is yours at the end of the agreementOptional
Fixed monthly payments
Optional balloon (final) payment
Avoid excess mileage charge
Secured against 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 they 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 enough 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 contract duration.

Advantages & Disadvantages of HP Car Finance


You can afford to purchase 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 finance 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 finance in full.

Your payments, which means the car will cost more than a one-time purchase.

Your rights in an HP agreement

Before you sign an HP deal, you should be aware of the rights you have and what you can expect if you violate the terms of your agreement. Read the contract you're about to sign thoroughly. These are some of the questions that apply to all Carplus clients who are planning to get an HR car finance:

Is there a possibility the vehicle will be repossessed?

Yes, your car will be repossessed if you violate the terms of the contract - for example, by not paying on time or not paying at all. Carplus follows the Competition and Consumer Protection Commission's guidelines that state the following:

  • If you have paid less than one-third of the purchase price, no matter how cheap the price is, Carplus can take your car back without taking legal action against you.
  • If you have paid more than one-third of the purchase price, cheap or expensive, you must go to court to get your vehicle back.

You should know that the car cannot be confiscated from your driveway, regardless of the amount paid. The seized car will most likely go on sale, and the proceeds will go towards paying 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, your HP finance contract can be terminated before you've paid your final payment. There are various reasons for cancelling car finance Hire Purchase deals early, including:

  • Change of financial circumstances
  • You no longer need a car
  • There is an opportunity to get a new car, and it seems to be more beneficial to cancel early and look for other cheap deals

Carplus offers the possibility of cancelling the HP agreement, regulated by the Consumer credit Act 1974, section 99. But in order to have the opportunity to cancel your deal, 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. Keep in mind that you won't be receiving any refund of the amount paid for the car, so you should weigh all the pros and cons of cancelling your HP agreement before doing so.

Does voluntary termination affect the credit score?

There is a chance that voluntary termination of the car HP agreement appears in your credit record. However, it is unlikely to have a negative impact on your credit score if you're terminating your deal by all rights.

That being said, if your circumstances suddenly change and you cannot keep making your Hire Purchase payments, it is always better to close the HP finance deal earlier than delay or stop your repayments. Just like with any other type of finance or loan, neglecting your car purchase obligations may result in severe consequences and prevent you from being approved for cheap finance deals in the future.

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Bad Credit History and HP Deals

The question that often gets asked is whether you can sign a cheap HP deal if you have a poor credit history. The general answer is yes, but the final decision depends on your particular circumstances.

Bad credit history can seriously affect your life to the point where you might not be able to plan even a cheap car purchase. Without a doubt, a low credit rating does make you a less favourable applicant for cheap car finance deals, but signing an HP agreement is still an option. Hire Purchase can be more expensive than car leasing, but on the other hand, it gives you an opportunity to obtain a vehicle and improve your credit score.

Does a Low Credit Score Affect My Interest Rate?

Yes, your car HP agreement's interest rate is dependent on your credit score. The lower it is, the more likely you are to pay higher interest, which is fair if you think about it: any car provider needs to be sure that the car is eventually paid for completely and that no issue occurs along the way.

Remember that Carplus is not a lender but rather a credit broker, authorised and regulated by the Financial Conduct Authority. We ensure that the interest you pay is fixed throughout the duration of your car finance agreement. Visit our website to find the best HP Deals with a starting rate of 7.9% representative APR.

Thus, regardless of your credit history, it is always worth checking the cheap finance deals and assessing the likelihood of having your application approved. You need to go to our website and fill out our quick questionnaire, and we will get back to you with a personalised quote. We'll go above and beyond to come up with the best cheap HP deal for you, so don't hesitate to try your luck, however, low your credit history is.

Why choose Carplus?

Selecting the best deals among the many car companies finance options is not an easy task. Don't settle for the first offer you encounter! Instead, compare the terms, conditions, and find cheap prices from various car companies finance providers. Here are some of the main reasons why entrusting Carplus to support you along your car purchase journey is a wise decision.

Individual Approach

Since 2016, Carplus has been providing cheap car finance services to our UK customers. For the last five years, we have seen different cases and situations, and we know for a fact that each of our clients requires an individual approach. Regardless of your circumstances, we will go above and beyond to provide you with the best services and the most suitable deals, whether you're looking for a cheap or more expensive vehicle. We make sure to tailor our approach specifically to every applicant's needs.

We value and respect each of our customers, and our client’s trust is the most important thing to us. That's why we try our best to make you satisfied with your experience with Carplus. Our experts will take care of you and support you throughout the entire process of getting a car loan.

Best Selection of Car Finance Deals

Carplus specialises in all types of cheap car finance, be it hire purchase, PCP, personal loan, etc. You can find all the information about each of the car finance types on our website.

We have collected the most beneficial car finance deals from various lenders for you to choose from, and we are constantly looking for new deals that might be attractive to our clients. With Carplus, you can rest assured that you will get the best cheap deals out there, depending on your situation, of course.

We'll help you find a deal, even with a low credit score. Carplus is ready to offer you options.

Higher Chances of Landing the Perfect Deal

Surely, there are just so many car finance providers across the UK. Whether you can get car finance from them not only depends on your particular situation but also on the level of professionalism provided by said brokers.

Our team consists of highly-qualified, knowledgeable professionals who are experts in their field. They will make sure that you are aware of all the options and opportunities you have to get the perfect cheap finance deals. Be sure to provide our experts with all the necessary information, and watch them make your life a little better.

Try your luck at other car finance providers, and you'll be convinced that the deals we offer are typically more generous than the rest.

Finding a Deal That Suits Your Budget Made Simple

As it's been mentioned before, Carplus is happy to help you find the perfect deals, regardless of your budget. There is even a possibility to get no deposit car finance, so don't hesitate to reach out to our team to see if you are eligible for the desired car finance.

We're definitely not one of those companies that only focus on people with a big budget. We don't care how cheap or expensive the car you want to finance is – our main goal is to make you feel supported and satisfied with our services until the last payment you make.

So don't be embarrassed, and certainly don't miss the opportunity of getting a new car – cheap or not – just because you thought that your application wouldn't even be reviewed. Our responsive team will always be there to guide you towards a reliable car finance offer. Whatever your budget is, we will do everything to provide you with options to choose from.

We Perform HPI Checks

When applying for car finance through Carplus, you don't need to worry about any issues arising along the way – all the necessary checks for the vehicles are done, and the results will be provided to you. At Carplus, we take our job very seriously and always complete the Hire Purchase Investigation to ensure full car ownership.

Outstanding Customer Service

We are very proud to tell you that we have thousands of happy clients. Check this for yourself by reading our online reviews. Carplus features a 5-star rating on Trustpilot, and that's something we wouldn't have been able to achieve if we didn't make our customers' satisfaction our main priority.

We know how important it is for our potential customers to know what the company that they are going to sign cheap finance deal with is all about, so we highly encourage you to look through the reviews of our past and current clients. It will definitely make you feel confident when applying for Carplus car finance and dealing with our experts.

Our customers mention our thorough approach to their applications, responsiveness, and timeliness in delivering results.

Convenient Estimation of Payments

Applying for car finance is a big deal as it will eventually reflect on your credit history. So if you're not ready just yet to send us your application, try the very convenient tool on our website – we've created a car finance calculator to make the process of estimating the APR and instalments easier. It will provide an idea of how much you would need to pay based on the amount you want to borrow and the period you'll need to repay the finance.

Keep in mind that the calculator doesn't provide you with an official estimate – you can just find out whether the payment amounts would fit your budget or not. But the good thing is that using this tool won't affect your credit score in any way, shape, or form, while an application will. The final decision is still made by our experts.

Be sure to use our calculator before you make the decision to apply for car finance at Carplus. Set realistic expectations and assess your budget to be prepared for Hire Purchase and other financing types.

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Here, we have summoned the most popular questions about Hire Purchase 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. 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, 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 a Hire Purchase car. You can sell a vehicle, a cheap or an expensive one, 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 Hire Purchase?

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 Hire Purchase early?

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