Hire Purchase (HP) is one of the simplest ways to spread the cost of a car – and own it outright at the end. We work with a wide panel of lenders to help you find a HP car finance deal that fits your budget.
Zuto is a credit broker, not a lender. Our rates start from 8.9%. The rate you are offered will depend on your individual circumstances. Representative Example: Borrowing £8,000 over 60 months with a representative APR of 18.8% the amount payable would be £200 a month, with a total cost of credit of £4,020 and a total amount payable of £12,020.
In its simplest form, hire purchase finance – sometimes just called HP finance – is a type of car loan that allows you to pay for a car in monthly instalments (with interest) over a set period of time, usually between 12 and 60 months (one to five years). At the end of the term, you will pay a small, one-off Option to Purchase fee, and then the car is yours.
Unlike with PCP car finance deals, with HP finance, there’s no large balloon payment at the end. Plus, your repayments stay the same throughout the whole term. With options available for a range of credit profiles, HP car finance can be the perfect choice if you want clarity, stability, and full ownership at the end.
With Hire Purchase, you make fixed monthly repayments until the end of your agreement – and once the final instalment (plus a small completion fee) is paid, the car is officially yours. It’s one of the simplest types of car finance and a popular choice for many because there’s no large final balloon payment to think about.
A HP agreement typically allows you to:
Because HP spreads the entire cost of the vehicle with no balloon payment at the end, it’s a practical choice for anyone who wants predictable payments and full ownership once the agreement finishes.
Using a car finance specialist like Zuto also means you can compare a wide range of HP offers from multiple lenders to find a deal that suits your budget.
You’ve found a car priced at £7,500 and choose to put down a 10% deposit (£750). That leaves £6,750 to be financed through your HP finance agreement.
This amount – plus the interest charged by the lender – is then divided into fixed monthly payments over your chosen term. Once you’ve made the final payment (including any small Option to Purchase fee), the car is officially yours.
Want to know what your monthly repayments could look like? Use our HP car finance calculator to get an instant estimate based on your budget.
Here are some of the reasons HP car finance is one of the UK’s most popular car finance options:
Suitable for a range of credit profiles: HP finance can be more accessible for people with poorer credit.
Step 1: Check Your Eligibility:
Complete a quick online form. We’ll run a soft credit check (it won’t impact your score) to see what HP options you may qualify for.
Step 2: Get a Personal Quote:
You’ll receive tailored HP offers from our panel of lenders, based on your circumstances and monthly budget.
Step 3: Choose Your Car:
Pick a car yourself or browse options from Zuto’s approved dealer network. We’ll run checks on any cars you are interested in to make sure you’re getting a good deal.
Step 4: Secure Your Finance:
We’ll handle the details with the dealer and lender, helping you finalise the agreement quickly and smoothly.
Step 5: Drive Away:
Once everything is approved, collect your car – and enjoy fixed monthly payments until it’s officially yours.
A deposit is often optional. Putting money down can lower your monthly payments and the total interest you pay, but Zuto also works with lenders who offer low- or no-deposit HP options.
Making your payments on time can actually help to build or improve your credit score. Missing payments can harm your score and may lead to the lender needing to take the car back, as it acts as security for the loan.
Yes, you can still get HP car finance deal with bad credit. At Zuto, we work with a panel of lenders who specialise in helping customers with less-than-perfect credit histories and may accept lower credit scores. While interest rates may be higher and optons more limited, there are still flexible options available. Our team will guide you through the process, helping you find a deal that suits your financial situation and gets you behind the wheel.
The finance company has a financial interest in the car until the final payment is made. Once you’ve completed all repayments – and paid any Option to Purchase fee – full ownership transfers to you.
The Option to Purchase fee in a Hire Purchase (HP) agreement is usually between £100 and £200, though it can range from £1 to £300 depending on the lender and your contract. It’s normally a small fee paid at the end of the agreement to transfer ownership of the car from the finance company to you.
The Option to Purchase fee is usually a small, fixed charge added at the end of your agreement to transfer ownership of the car to you. The exact amount varies by lender – it can be between £1 - £300 – so it’s important to check your quote so you know exactly what to budget for.
Yes, because of interest – known as APR – will be added to your monthly repayments, you will pay more than the vehicle is priced at when using hire purchase finance. However, the monthly costs mean you might be able to drive a better car than you would otherwise be able to afford when paying the full amount upfront.
Yes. One of the key benefits of HP finance is predictable budgeting and protection against any interest rate rises. Your monthly payments stay the same throughout the term.
Most lenders allow early settlement or overpayments. This can reduce the interest you pay overall. The exact process and any fees will depend on your lender, so it’s important to check your agreement.
Generally not without the lender’s permission. Because they have a legal interest in the car until the agreement ends, you’ll usually need approval before selling or making major modifications.
If you miss payments, the lender can in some scenarios repossess the car because it acts as security for the loan. Missed payments can also negatively impact your credit score. It’s important to contact your lender immediately if you’re struggling to keep up with payments.
The impact of missing a payment depends on your lender. It's important to understand that missing a payment can negatively impact your credit score. If you fall behind, you should speak to your lender in the first instance to see if there are any other options you can explore.
The best thing to do is to try to calculate what you can afford at the beginning. However, we and our panel of lenders appreciate that your circumstances can change. Get in touch with your lender if this happens.
HP agreements cannot be freely cancelled, and you can’t return the car without the lender’s permission. Some lenders may offer options, but this must be agreed in advance.
Depending on how long is remaining on your finance agreement, you can settle your finance early and sell or part exchange the car if you are interested in upgrading to a new car. You might also be able to look at refinance options if you want to change the terms of your finance.
Yes, HP can be used for both new and used cars, though it’s most popular for used vehicles. Zuto works with hundreds of verified dealers to help you find a used car and a finance option that suits your budget.
Yes, you can get car finance when buying a car privately. Find out more with our guide to getting finance options from Zuto when you buy a car from a private seller.
Our guide will help you understand the key differences between Hire Purchase and Personal Contract Purchase car finance.
This guide will help you understand what options you have for making your balloon payment for a PCP finance deal.
Our guide will help you understand what a finance settlement is and the steps involved in how a settlement works.
