What is HP finance?

Hire Purchase (HP) is a common form of finance available both directly from dealerships and third-parties. It can be a cost-effective way of financing your car if you wish to own it outright at the end of the agreement term.

How does it work?

After paying an initial deposit (typically 10% - 40% of the car's value), the remaining value of the car is paid back in monthly instalments spread across an agreed term of up to 5 years.


HP is sometimes available with 0% interest, in which case you pay no more than the value of the car over the entire term. Other agreements do incur interest which is added on to your monthly repayments.

The benefits of HP include:

  • owning the car outright at the end of the agreement term, with no lump sum to pay off
  • often lower interest rates than PCP alternatives
  • no mileage limits
  • no servicing or maintenance obligations
  • often larger maximum deposit limits than PCP, meaning you can pay more and borrow less if you prefer
  • flexible term lengths of between 1-5 years in most instances

However, the disadvantages of HP can include:

  • typically higher monthly repayments than PCP finance
  • interest rates often higher than a personal car loan
  • not owning the car until the final payment is made
  • difficulty selling the car before the finance is paid off
  • unlike PCP, the future value of your car is not guaranteed

For further information, read our full HP guide or find out about different types of finance here.

Remember: you need to make sure you fully understand any finance agreement before committing to it as terms and conditions will apply. Your carwow dealership will be able to advise you on a number of finance options that may be suitable for your personal circumstances, however other ways of purchasing are available.

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