Motoring for Life logo

Hire Purchase

What is Hire Purchase agreement?

Hire Purchase agreements start with a deposit (or a part-exchange). A term is agreed for monthly payments, usually lasting between 36-60 months. These monthly HP finance payments are fixed by the interest rate set at the beginning of the agreement.

HP car deals

HP car finance is your best option if you’re 100% committed to owning the car. Unlike the more popular PCP finance, Hire Purchase deals guarantee full ownership of the car at the end of the agreement.

The size of your deposit or part-exchange will affect the amount you pay monthly. For example, a larger deposit or part-exchange will reduce this figure considerably. You’ll also pay more interest on longer agreements but your monthly payments will be smaller. The opposite applies to shorter contracts.

What happens at the end of the HP car finance deal?

Return the car to the dealership

You can hand the vehicle back and pick a new one. At Stoneacre, we work with a large variety of trustworthy lenders that get you the best deal.

Part exchange your car towards a new one

If you want to make car purchasing more affordable, consider part-exchanging your car to cover part of a cost. The more deposit you can cover via part-exchange, the cheaper the monthly payments.

Pay a balloon or a GMFV payment to own a car

This is also called an option to purchase fee. If you're set on owning a car, then this is the deal for you - simply pay the outstanding amount.

Help! - I can’t afford my HP repayments

There are a few options to choose from if you can’t afford to pay for monthly HP finance. Firstly, you should contact your lenders and try to work out a deal. If you don’t take action, the car may be repossessed, and your credit score will suffer too.

Refinancing the car

You can usually switch to cheaper finance by getting a less expensive car, however, you’ll need to repay the remaining balance of the current car, plus pay monthly payments on the new deal. This option may not be for everyone, but the most common, unfortunately, is handing the vehicle back to the dealer.

Hire Purchase Advantages and Disadvantages

Before choosing a finance deal, you should weigh all the pros and cons to get the best finance offer for your needs. Below we outline some of the most common HP advantages and disadvantages.

Advantages of Hire Purchase

- You will take full ownership of the car once all the payments have been made and the contract has finished

- The rate of interest and monthly payments are fixed in place, allowing you to plan effectively for your finances during the contract

- Hire purchase is a simple way of financing and relatively easy to obtain

Disadvantages of Hire Purchase

- Monthly payments are higher compared to PCP and PCH packages since you're paying for the full sum of the car

- You'll need to be aware of the effects of depreciation and the decline in the car's value over time

- If your financial situation changes and you can't afford the monthly payments, the car may be repossessed

Finance Disclosure

For the purpose of this promotion Stoneacre is not acting as a lender but as an independent credit broker working with a panel of lenders. A list of these lenders is available upon request. Stoneacre do not charge a fee for an introduction to a finance provider, however, we may or may not receive a commission.

Decidebloom Ltd t/a Stoneacre, Omega Boulevard, Capitol Park, Thorne, DN8 5TX, is authorised and regulated by the Financial Conduct Authority. Our FCA number is 308726. You can verify this by visiting the FCA website or by contacting the FCA on 0800 111 6768.