Hire Purchase

Hire Purchase is a popular finance option for customers who would like to eventually own their vehicle.

Credit ratings explained

Excellent

You are a home owner
You have been on the electoral roll for a long period of time
You have current credit arrangements and mortgage with no defaults
You have no CCJs, credit arrears or missed payments
You rarely apply for credit
You are employed or self-employed

Good

You are on the electoral roll
You are a home owner or long standing-tenant
You have a stable employment history
You have current credit arrangements with occasional missed payments
You have no CCJs

Fair

You are or have recently been on the electoral roll
You may have recently changed address
You may have occasional missed payments
You may have an old CCJ
You may have regularly applied for credit

I'd like to borrow

Over a period of

My credit score is

Illustrative example

Monthly payment Subject to credit score

Total repayment of
APR of

Representative example:

Borrowing £10,000 at a representative APR of 12.4%, annual interest rate (fixed) 12.4%, 59 monthly payments of £221.08 followed by 1 payment of £231.08, total cost of credit is £3,274.80*, total amount payable is £13,274.80.

*The representative example includes an estimated option to purchase fee of £10. This is subject to status and although fees may vary in amount and when payable, the total cost of credit and APR received will not alter. This representative example is for illustration purposes only and does not constitute an offer. Written quotations are available on request and finance is subject to status.

AA Car Finance is provided by Evolution Funding Ltd. AA Cars introduces you to Evolution and both are credit brokers and not lenders. The payment received by the AA from Evolution will vary dependent on your chosen lender.

What is HP?

Hire Purchase (HP) is a type of car finance that allows you to make monthly payments to pay off the cost of a car instead of having to pay the upfront price in one go.

Unlike Personal Contract Purchase (PCP) there is no final payment at the end of the contract, you own the car outright. The cost of the car is divided across a deposit and a series of fixed monthly payments, a typical HP agreement is over three to five years. As soon as you've made the final payment, you automatically own the car.

How does HP work?

With HP you can fund your next car. Simply follow the steps below:

Understand your budget Use our calculator to understand what your monthly payments might be and see if you are eligible for our HP product.
Check your Eligibility
Apply We'll need a few personal details, information about how much you want to borrow and how long you want to borrow the funds for. HP can last up to five years.
Repayment With HP, you'll need to make monthly payments to pay back the borrowed funds. At the end of your agreement you own the car outright.

How much will an HP deal cost?

HP is a common way to buy a car using a secured finance solution. The contract is made up of some key elements.

Deposit: The larger the deposit you put down, the less you'll need to borrow and hence pay interest on.
Loan term: If you choose a longer term it will usually mean lower monthly repayments, but naturally this will likely mean paying more interest over the term of the agreement.
APR: The lower your interest rate (APR) the less interest you'll have to pay across the term of your HP agreement. The better your credit is, the better chance you will have of getting a lower interest rate.
Final Payment: At the end of your agreement you own the car outright.

Require initial a deposit: Usually requires deposit
Own the car on Day 1
Own car at end of agreement
Optional final (balloon) payment
Fixed monthly payments
Excess mileage charge
Secured against an asset

Check your Eligibility

Contact us

If there's anything you'd like to discuss, just call or email:

Call: 01246 458 809 Email [email protected]

Monday to Friday: 8:30am – 6:30pm
Saturday and Sunday: 9:00am – 5:00pm

Car Finance & Car Loans FAQ's

What does HP stand for?

HP stands for Hire Purchase. You do not own the vehicle until you have paid the last monthly payment, you effectively 'hire' the vehicle during the HP agreement term, until the final payment when you own the car outright.
What to look for in an HP deal?
An HP agreement is made up of 2 elements.
1. A deposit, which is paid at the beginning of the agreement.
2. Monthly payments, which are paid during the lifetime of the agreement.
Who owns the car on an HP car finance deal?

During the contract, the vehicle is owned by the finance company, once you pay the final payment you own the car outright.
How long does an HP agreement run for?

HP agreements usually run between 36 to 60 months (3 years to 5 years).
Can I settle my HP loan early?

Yes, you can settle your HP agreement early, however this may be subject to penalty charges.
Is there a balloon payment?

No, once you finish the contract you own the car outright.
Can I switch cars during my HP agreement?

No.
Are there annual mileage charges in an HP agreement?

No, there are no excess mileage charges with an HP agreement.
Do I need a deposit for an HP deal?

No, it is recommended that you put down a deposit. The size of the deposit effects the size of the monthly payments. The larger the deposit, the lower the monthly payments.
What is the difference between HP and PCP?

HP (Hire Purchase) is a finance plan that allows you to spread the cost of the car by making monthly payments over an agreed term. You make higher monthly payments than a PCP agreement, so that when you come to the end of the agreement you'll own the car. Unlike PCP, there are no limits on mileage. HP could be right for you if want to own the car at the end of the agreement, without the need to make a larger final payment.

PCP is a finance plan where you make equal monthly payments over an agreed term, with a larger final repayment due at the end if you decide to keep the car. At the end of the agreement, you have three options. You can hand the car back to the finance company (the car must be in good condition and within the agreed mileage, otherwise charges may apply), part exchange it for another car on a new agreement (subject to status), or pay the final repayment to own the car. PCP could be right for you if you're thinking of changing your car in the next few years, or if you're unsure whether you want to buy the car at the end of the agreement.
What credit score do you need for HP finance?

HP agreements can be offered to people with a whole spectrum of credit scores. However, the higher your credit score, the more likely you are to be accepted.
Can you sell an HP car?

Yes, but only once you have completed your final payment.
Can you change from HP to PCP?

No. Once you have signed up to an HP agreement, you are not able to change your mind and switch to an alternative finance product mid-term.
Can you extend an HP agreement?

This is possible, but it would constitute a new HP agreement. A new HP agreement is subject to status at the time of application.
Can you modify a car on HP?

No.
Can you part exchange a car on HP?

Only once you have made the final payment and own the car outright.
Can you get HP on a used car?

Yes, HP agreements are available on both new and used cars, as long as they meet the criteria set out by the finance provider.