Hire purchase car finance

Start your search for car finance here

Rates from 9.9%. Representative 19.9% APR.

Representative example: borrowing £10,000 over 5 years with a representative APR of 19.9%, an annual interest rate of 19.9% (Fixed) and a deposit of £0.00, the amount payable would be £255.50 per month, with a total cost of credit of £5,329.80 and a total amount payable of £15,329.80. This is representative of CarFinance 247 Limited customers.

We've partnered with CarFinance 247 to offer the best finance deals from their panel of lenders. CarFinance 247 is a credit broker not a lender.

  • Find the right deal for you with our trusted partner CarFinance 247
  • Get a finance quote without affecting your credit score
  • Make monthly repayments with no financial lump sum to pay

Confused.com and CarFinance 247

We've partnered with CarFinance 247 to find you their best deal from a range of car finance lenders. Their service is free to use and getting a quote won't impact your credit score. A hard search only happens when you apply for a deal.

If you've already found your next car and just need the finance deal, they can help set it up for you. If you're still looking for your dream car, their car search gives you access to over 100,000 cars from across their trusted dealer network.

Once you’ve requested a quote, you will get a call from one of CarFinance 247’s account managers to discuss it in more detail. Alternatively, you can arrange to have them call you at a more convenient time.

CarFinance247 searches their panel of trusted lenders to present you with a quote over the phone with the best overall value. However, account managers will also discuss alternative options to fit your circumstances over the telephone.

Please note, car finance options discussed will depend on lenders checks and whether your chosen vehicle meets their criteria.

CarFinance 247 customers rate them 4.9/5 on Trustpilot*.

*Correct as of December 2023

What is HP finance?

Hire purchase (HP) car finance allows you to buy a car without having to pay everything upfront.

You’ll usually need to pay a deposit when you take out an HP car finance agreement. The balance of the car’s value together with the hire purchase interest will be paid in monthly instalments over a set period of time. This is usually anything from 1 to 5 years.

You won’t have to make a big final payment at the end of the HP finance term – once you’ve made the last monthly payment you’ll own the car outright. There may be a small admin fee due at the end of the agreement, and the details of this should be listed in your policy documents.

Hire purchase is quite similar to another form of car finance called personal contract purchase (PCP). HP and PCP both involve a finance agreement to purchase the car, however the main difference is with PCP you have more options at the end of the agreement with what happens to the vehicle. Our PCP car finance page can help explain more about this type of finance.

How does a Hire Purchase agreement work?

When buying a car on HP car finance, you can either work out a hire purchase agreement directly with a dealer, or you can use us to compare and apply online for HP car finance through our panel of HP providers.

You’ll usually need to pay an initial deposit, which is typically around 10% of the full value of the car. After this, you can drive the car while you pay off the remainder of its value each month, plus interest.

What's the difference between Hire Purchase and a personal loan?

The main difference is that if you’re taking out a personal loan, the car is yours as soon as you buy it. You'd just need to repay what you’ve borrowed, plus any interest.

But a personal loan is not secured against the value of the car, so the car would be yours from day one.

With hire purchase car finance, the car isn’t actually yours until you’ve made the final payment.

How much does HP cost?

With HP car finance, the main cost is made up of the initial deposit and the monthly payments you'll make over the term of the contract.

Your monthly payments depend on:

  • The car's value

    . The more expensive the car, the higher your monthly payments.

  • How much deposit you pay

    , as paying more upfront will reduce your monthly instalments.

  • Length of the hire purchase agreement

    . The payments for a five-year HP contract term should be lower than with a three-year term, as the cost is spread over an additional 2 years. You'll likely end up paying more interest as a result.

  • HP interest rate

    . A higher interest rate will increase your monthly payments.

When you organise your car finance through CarFinance 247, you won't be charged a fee for using the service. They earn a commission based on the deal you're offered, but it doesn't affect the interest rate or the amount you pay in any way.

What our car finance expert says

Hire Purchase can make owning a vehicle that little bit easier, without having to pay out a lump sum at the end of the agreement. You'll usually have to pay a deposit at the beginning, but once you get to the end of the agreement, you'll own the car outright. You can pay off your HP agreement early, but you'll probably have to pay an early settlement figure, so it's important to consider this when choosing which car finance option is best for you.

Search for a car finance deal from trusted UK providers

Representative APR 19.9%

What are the alternatives to Hire Purchase?

Here are some alternatives to hire purchase:

Personal contract purchase (PCP) involves making a large payment at the end of the finance contract if you want to keep the car. The monthly payments tend to be lower as you’re only paying off the depreciation.

Depreciation is the difference between what the car's worth at the start of the agreement and what the dealer says it'll be worth at the end. You’ll also need to pay a deposit at the beginning.

Personal contract hire (PCH) is an agreement to lease the car. You’ll pay a small deposit followed by monthly payments, which also tend to be lower than with HP. At the end of the PCH contract, you’ll give back the car. As long as you don’t exceed a given mileage level, maintenance and servicing are usually included. There's also no option to purchase the vehicle at the end of the agreement.

A personal loan means you borrow a sum of money which you can use to buy a car. You’ll be the owner of the car as soon as you hand over the money to the seller. If you choose a longer loan term, you’ll pay more in interest.

What are the pros and cons of car Hire Purchase?


You own the car at the end of the agreement
Repayment terms are often flexible with a fixed interest rate
Relatively low deposit payments are required
You might be able to return the car part-way through the repayment period
There's no final lump sum to pay at the end of the agreement


The car isn't yours until you’ve made the final payment
If you can’t meet payments, the finance company could take your car away
The size of your deposit and length of your repayment term will affect your monthly payments
You may be limited to buying your car from a particular manufacturer or dealership
If you exit your HP agreement early, you may have to pay an early repayment charge and admin fees

How much can I borrow?

Check what your monthly repayments are likely to be

Can I cancel a HP agreement before the final payment?

It's worth knowing that many HP car finance deals allow you to terminate the agreement before the final payment is made. This is referred to as voluntary termination and is your legal right as part of the Consumer Credit Act 1974, section 99. This should all be noted within your contract.

To cancel your HP agreement early, you’ll need to ask your HP car finance provider for an early settlement figure. To find out what charges you may be faced with, check the terms and conditions of your HP agreement.

For example, many HP agreements say that as long as you’ve repaid 50% of the total amount, which includes any interest, you can end the agreement and give the car back.

You can also trade in the car at a dealership. The dealer would pay the early settlement figure for you to end your current HP car finance agreement. If the trade-in value offered by the dealer is lower than the early settlement figure, you’ll need to pay the difference.

How do I get the best HP car deal?

There’s no one best HP car deal as every agreement will suit different people depending on their financial circumstances.

For example, a HP car deal taken out over a shorter amount of time will usually require higher monthly payments than one over a longer period.

Paying a higher initial deposit also tends to lower your monthly payments on HP car finance. Ultimately, it’ll depend on how much you can afford to pay back each month.

Some hire purchase finance deals are more competitive than others, so it’s worth comparing HP car finance agreements.

Car finance guides

Warning over mis-sold car finance deals - Confused.com

Experts claim thousands of car buyers could have been mis-sold finance packages by their motor dealers. We explain how you might have been affected.

Read More

Can I sell a car with outstanding finance? - Confused.com

Want to sell your car but you’re still paying for it? We explain when and how you can sell a car that has outstanding finance.

Read More

Voluntary termination: how to end PCP early - Confused.com

Looking to end your car finance agreement now and potentially get a new contract? If you want to cancel a HP or PCP deal early, here's what you need to know.

Read More

Confused.com’s car finance journey is provided by CarFinance 247. Car Finance 247 is a trading name of CarFinance247 Limited. Registered office: Universal Square, Devonshire Street North, Manchester, M12 6JH. Registered in England. (Registration Number 06035525). CarFinance247 Limited is authorised and regulated by the Financial Conduct Authority.

Car Finance 247 Limited is a credit broker, not a lender and looks to find the best deal from their panel of lenders. Car Finance 247 Limited earn a commission for providing their services, but this does not influence the interest rate you’re offered in any way.