Hire Purchase (HP)A straightforward way to purchase your vehicles using a pre-agreed number of payments
One of the oldest forms of finance, Hire Purchase involves paying for the entire cost of the vehicle, plus interest, over a set period of time. As long as you keep up the repayments, the vehicle will become your property at the end of the contract and you can use it in any way you see fit. However, because the entire cost of the car or van, less any deposit, is financed then it can result in higher monthly payments than vehicle leasing options such as Business Contract Hire.
- There’s no vehicle usage restrictions, mileage surcharges or end of contract damage fees
- Full ownership is passed to you once all payments have been made
- The finance agreement is secured on the vehicle alone
- Vehicles can be sold at the end of the contract to create a deposit for a new car or van
How it works:
Most of us have had some form of Hire Purchase (HP) agreement in the past and this method of finance is still heavily used within the retail sector.
Hire Purchase arrangements involve taking out a loan for the entire cost of the vehicle, and then paying back the capital cost, plus interest, over a pre-agreed timeframe.
At the end of the agreement the vehicle is wholly owned by you and there are no mileage restrictions to worry about. However, because the entire cost of the vehicle is being financed, the monthly payments will generally be significantly higher than alternative finance options such as Business Contract Hire or Personal Leasing.