Hire Purchase is the name of one of the most common types of car finance agreements. We explain exactly what a Hire Purchase agreement is and how it works, with lots of handy resources so you can find out more. In brief, a Hire Purchase agreement means:
Hire Purchase is one of the most popular types of vehicle finance agreements in the UK. It works by spreading the total cost of the vehicle over a series of monthly payments. When you take out a Hire Purchase agreement, the lender will give you a secured car loan for the total cost of the vehicle which you must pay back (including interest) according to the fixed monthly repayments over the fixed term. You can take out a Hire Purchase agreement on a range of both new and used vehicles.
Hire Purchase agreements are available to people with a range of credit circumstances and incomes. This means that even if you have Bad credit or a low income, you may still be eligible for a loan from one of our panel of lenders. It should be noted however, that the better your credit rating, the better the rates that you will receive. If you have little or no credit, you may be able to access better rates by having a guarantor on your agreement who has a strong credit file. Equally, if you choose to take out a joint application, the credit score will usually be judged based on the person with the best credit file.
Hire purchase agreements are the most widely available types of car finance, and can be used to finance the biggest range of cars. However, there are usually some restrictions on the cars you can finance, such as age – to find out more about what cars Creditplus can help to finance, visit our dedicated Help & Advice section. If you wish to finance a new or nearly new vehicle and have a good credit rating, you may choose to look into a personal contract purchase – a finance agreement which works much like a leasing agreement, but offers the option to purchase the car at the end of the contract. To find out more about personal contract purchase, visit our dedicated terms page. For details on how Hire Purchase works with Creditplus, visit our Hire Purchase Car Finance options page.
“Hire purchase (abbreviated HP) is the legal term for a contract, in which a purchaser agrees to pay for goods in parts or a percentage over a number of months. In Canada and the United States, a hire purchase is termed an instalment plan although these may differ slightly as in a hire purchase agreement the ownership of the good remains with the seller until the last payment is made. Other analogous practices are described as closed-end leasing or rent to own….”
Source: Hire Purchase on Wikipedia.org
Unsure if Hire Purchase is the best car loan product for you, use our interactive tool to discover the best car finance option for you: Car Finance Options tool.
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