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Once you’ve decided HP is the right financing option for you, compare HP deals through MoneySuperMarket, in partnership with Motiv
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What is hire purchase?
Hire purchase (HP) is a type of car financing agreement where the loan is secured against the car.
With HP you usually pay an upfront deposit and then make fixed monthly payments for an agreed period. The finance company has security in the form of the car, so if you don't keep up with repayments, they can take it away.
However, this security also means the finance company is more likely to consider an application from you if you have a poor credit rating due to missed payments or CCJs in the past.
If you’re looking to compare hire purchase deals, let MoneySuperMarket do the hard work for you. We’ll help you to find and compare deals so you can find the right car finance for you.
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Choose PCP and you'll pay an initial deposit and monthly payments to cover the remaining value of the car, plus interest. At the end of the term, you can buy the car or walk away.
Optional purchase lump sum
At the end of your PCP, you will have the option to keep the car if you pay lump sum. We've estimated this to be taking your total cost to .
Find car finance loanChoose HP and you'll make monthly payments and usually pay a deposit. At the end of the contract term, you'll own the car.
How does a hire purchase agreement work?
If you want to go down the HP route for your new wheels it’s important to understand how the contract will work. Here’s a step-by-step example of how a hire purchase agreement works:
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Make an optional deposit
You’ll have the option of paying a small deposit – in some cases this can be done via part exchange – to secure the car.
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Pay monthly installments
You’ll pay back the money you owe in monthly instalments. You’ll be the ‘registered keeper’, but the finance company will own the car until you’ve paid all your instalments.
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Own the car
At the end of the deal there is usually a small ‘option-to-purchase' fee but then you’ll be the legal owner of the vehicle.
What are the pros and cons of hire purchase?
Here are some of the downsides and benefits of hire purchase:
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Advantages
You own the car: At the end of the agreement you’ll own the car and you’re free to do with it whatever you like
No mileage limit: Unlike other types of car finance, with hire purchase there usually isn’t an annual mileage limit you must stay within
Option for bad credit: If you have a low credit score, it might be easier for you to be approved for hire purchase than taking out a personal loan
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Disadvantages
Can’t modify the car: You won’t own the car until the end of your hire purchase contract. Until then you can’t make any changes to the car
Maintenance expenses: With hire purchase, you’ll be the registered keeper of the car, so you have to pay to insure and maintain the car
Repossession risk: If you don’t keep up with your monthly payments, you face the risk of the car being repossessed
Am I eligible for hire purchase car finance?
To be eligible for hire purchase car finance, you’ll typically have to…
Meet an age requirement
This differs between hire purchase finance companies, but in general you'll need to be over 18 to be considered. Some lenders also apply an upper age limit and will only lend to people aged under 79.
Be able to provide proof of income
Payslips or bank statements are both acceptable forms of proof of income. It's important to note that hire purchase companies aren't looking to check if you're in full-time work, rather that you've got a regular income.
That means you can still get a hire purchase car finance deal if you're self-employed, a sole-trader, pensioner, or in receipt of long-term disability benefit.
Be able to provide proof of ID and address
As with any sort of borrowing, hire purchase car finance providers will want to see some ID. Acceptable forms of identification include a passport or a driver’s licence.
They’ll also want to see utility bills as proof of address.
Have an acceptable credit history and credit use
Criteria differ between lenders, but all will take a good look at your credit history and current borrowing to assess if you’re a responsible borrower and a good bet for credit.
Why choose HP finance with MoneySuperMarket?
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Find the right deal
You’ll see all the HP deals you’re eligible for in one place. This includes the interest rate you’ll be charged and how much your monthly repayments will be.
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It won’t harm your credit score
We’ll ask a few quick questions about your finances to only show you deals that you’re likely to be accepted for.
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Apply today
It’s quick and easy! Once you’ve found the HP deal for you – then you can apply today and be one step closer to leasing your new car.
How to choose the best HP deal for you
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Set your budget
Make sure you choose an HP deal you can afford to repay each month. The more expensive the car, the larger your repayments and the more interest you’ll pay.
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Check the terms of the deal
Make sure the deal delivers what you need – from the amount you’re borrowing and the interest rate, to any early repayment charges.
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Check there are no errors on your credit file
Check your credit report to make sure all the information is correct. Take steps to boost your credit score.
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Compare from a range of deals
Compare HP options with our partner Motiv to find a deal that's right for you. If pre-approved, they’ll talk you through your options.
What happens at the end of the hire purchase agreement?
When getting a car through hire purchase, the cost of the vehicle is spread across monthly instalments (including interest). So, once your hire purchase contract finishes, you should have paid off the car and you’ll be the owner. As long as you have paid off the entire balance of the car, you’re free to do whatever you want with the car.
What are the alternatives to getting a hire purchase car?
There are a range of alternative finance options for buying a car if you decide against hire purchase. These include:
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Personal contract purchase
This type of finance works by you paying a deposit and then making a fixed number of payments. When the contract ends, you can make a large final payment to keep the car or return it to the dealer
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Leasing – personal contract hire
You put down a deposit and make fixed monthly payments to lease the vehicle, when the lease ends, you hand the car back with no option to buy
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Car loan
You take out a personal loan to cover the cost of the car, which involves choosing how long you’ll need to pay off the loan. You’ll own the car as soon as you’ve paid the seller the money
What happens if you miss a payment with hire purchase car finance?
Contact your lender. If you’re struggling to make a payment, speak to your lender as soon as possible. They may offer solutions like a payment plan to help you stay on track
Late fees and reminders. If a payment is missed, the lender will notify you and may charge a late fee
Default notice. Continued missed payments could lead to a formal default notice
Risk of repossession. If you've paid less than a third of the total amount, the lender can repossess the car without a court order
Credit impact. Missed payments can damage your credit score, making future borrowing more difficult
Our expert says…
Hire Purchase has fixed interest rates and set monthly payments, making it a great way to finance buying a car. As the name suggests, you hire the car for an agreed amount of time and then at the end of the term you can purchase it for an affordable fee. Paying a deposit can lower your monthly instalments. HP is low risk for lenders so you might get a deal even if you have bad credit.
Emma Lunn Personal finance expert
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Learn more about hire purchase agreements
Compare HP car finance deals with MoneySuperMarket and our partner Motiv
You can compare hire purchase deals with our partner Motiv, in a few simple steps:
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Tell us about yourself
We’ll ask you a handful of simple questions about you, your finances and the deal you’re looking for
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Your ideal car
If you’ve already found the car you want, you’ll need to enter those details. Not found your new wheels yet? Don’t worry, you can still compare deals with us
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Choose your deal
If any of the offers presented to you via Motiv match your needs, then you’ll be able to continue your application with your chosen product.
What car can I get on hire purchase?
For HP to be an option, the car you are looking to buy will typically need to meet the following criteria:
- It must be for sale at a reputable car dealership
- It must not be too old or have done too many miles
The exact criteria here will depend on the finance company, but as a guide if the car is more than 10 years old or has done more than 100,000 miles HP is less likely to be an option and you may want to look at a personal loan / car loan
How much will I need to borrow with a hire purchase deal?
The amount you will need to borrow will be the difference between the value of the car you are looking to buy and any up-front deposit you put down. The finance company will then set your monthly instalments to cover the borrowed amount as well as the interest you are charged during the period.
Can I change my car on HP?
If you want to change your car, any outstanding finance outstanding on your current car will need to be settled first. You have two main options:
1. Settle it yourself: You will need contact your current finance provider and ask for an “early settlement figure”. Once this is done, the car will be yours and you can either trade it in at a car dealership, or sell it privately and use the proceeds money towards your next car
2. Trade it in: Another option is to simply trade it in at a dealership and in this case the dealer will settle the finance for you. Any difference between the “early settlement figure” and the trade-in value offered by the dealer can then be used as a towards your next car. Note that if Ifthe car’s trade-in value is lower than the early settlement figure this may still be an option, but you will likely need to make up the difference yourself in cash (known as negative equity). This is called a “negative equity” situation.
Can I sell my car if its on HP?
Unfortunately, during the term of the agreement you will not own the car and so will not be able to sell it. If you wish to sell the car you will need to settle the finance first.
Can you modify a car on HP finance?
If you wish to make any modifications to a car that is currently financed with HP then you’ll usually need to obtain get permission from the finance company. This is because although you may be the registered keeper of the car, the finance company will be the owner until the finance is paid off in full.
Can bailiffs take a car on HP?
During the term of an HP agreement the car will be owned by the finance company. This usually means bailiffs cannot seize it, but the law is complicated around this so however the law is complicated on this matter and they may suggest that they can. In this scenario contact Citizen’s Advice for help and in the meantime, you may want to consider moving your vehicle to a different location where bailiffs are unable to access it , for example, a friend or family’s driveway (assuming you have permission) or a locked garage.
Can I pay off my hire purchase deal early?
You may be able to pay off your hire purchase agreement early, but how this would work will vary depending on your lender. If your lender lets you pay off your HP deal early, you’ll repay the remaining amount borrowed – so you’ll save money on interest, but you may need to pay an early repayment charge.
To pay off your hire purchase deal early, you’ll need to ask for a settlement figure from your lender which will include the outstanding amount you have left to repay, minus any future interest not yet accrued, plus any fees the lender may charge you. Your settlement figure will be valid for 28 days – if you choose not to repay your deal within this time period, you’ll need to request a new settlement figure.
Is HP or PCP better for me?
Whether or not HP or PCP will be better for you will depend entirely on your circumstances and your preferences.
HP might be ideal for you if you want to own your car once the contract ends and don’t want to be restricted by mileage limits.
PCP might be for you if you’re not interested in owning the car and would prefer cheaper monthly payments. Our guide, PCP vs HP, explains more.
Can I get a hire purchase deal on a used car?
Yes, you can get a hire purchase deal on a used car.
Can I get HP with bad credit?
As HP finance is secured on the car you buy, the lender is more likely to approve your application if you’ve missed payments or had CCJs in the past. It’s important to remember:
If you have a poor credit history, it is still possible to get a HP deal
A stronger credit score will improve your chances of being accepted for the HP deal you’re after
When you compare hire purchase finance through MoneySuperMarket, we’ll do a ‘soft search’ - so your credit score won’t be affected
Reviewed on 26 Dec 2025 by
