Finance Products

Hire Purchase

Hire Purchase (HP) could be your route to ownership. Here, we’ll break down how Hire Purchase works, along with its benefits and considerations, to help you make an informed decision. 

What is Hire Purchase?

Hire Purchase is one of the most established forms of vehicle finance, and for good reason. It offers a transparent, structured path to ownership, with no ambiguity about the outcome. From the moment you take delivery, the vehicle is yours to use; at the end of the agreement, it becomes yours to keep. 

The finance company retains legal ownership during the term, but your relationship with the vehicle, and your road to owning it outright, is straightforward from day one. 

How Does Hire Purchase Work?

A Hire Purchase agreement is built around three simple elements:

  • An initial deposit – or in some cases, no deposit at all
  • Fixed monthly payments over an agreed term, typically 12 to 60 months, or up to 84 months for higher-value vehicles. 
  • A small option-to-purchase fee at the end of the agreement, upon which ownership transfers to you

The monthly payments cover the full value of the vehicle plus interest, spread evenly across the term. There are no deferred sums, no balloon payments, and no end-of-term decision to wrestle with. You make your final payment (incl. the option to purchase fee) and the vehicle is yours. 

Hire Purchase infographic

Key Features of Hire Purchase

  • Flexible Repayment Terms

    Choose a term that suits your budget, with a range of options available to tailor the monthly instalments.

  • Low/No Deposit

    In some cases, Hire Purchase agreements require minimal or no upfront deposit, making it accessible for a range of buyers.

  • No Mileage Restrictions

    Unlike other finance options, HP typically doesn't impose mileage restrictions, allowing you to drive without limitations.

  • Straightforward Process

    The simplicity of HP makes it easy to set up and understand, offering a clear route to vehicle ownership.

  • Credit-Friendly

    If your credit history is less than perfect, HP may be easier to secure than unsecured loans, as the vehicle itself serves as security.

Considerations of Hire Purchase

  • Secured Finance

    As with any secured lending, the vehicle is at risk of repossession in the event of sustained non-payment. This is a standard feature of HP, not unique to any particular lender.

  • Credit Impact

    Late or missed payments may negatively affect your credit rating.

  • Higher Monthly Payments

    HP payments can sometimes be higher than those in other finance arrangements, such as Personal Contract Purchase (PCP).

To find out what Hire Purchase options may be available to you through our panel of lenders, apply online or contact the Premier Specialist Solutions team. 

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