What is hire purchase (HP)?

Hire purchase, or HP, is one of the most common types of funding used to purchase a vehicle. It is usually based on a fixed length of time and secured to the purchase of the vehicle. You own the vehicle only once all the regular payments and the option-to-purchase fee are paid.

Here are some positives for hire purchase and some things to remember.


  • There are no mileage restrictions. Unlike PCH or PCP, you do not need to estimate your mileage at the beginning of the agreement, which means you'll never face excess-mileage fees.
  • Once you have made your final payment (as well as the option-to-purchase fee) you will have full ownership of the vehicle.


  • You cannot sell the vehicle without first settling the finance.
  • You will not own the vehicle until you have made all of the repayments.
  • You need to keep the vehicle insured, maintained properly and in your possession until the full value of the car has been paid off.
  • The monthly payments can be more expensive than the payments for other finance options, because you pay off the full value of your chosen car.

So, is HP the right option for you? It is perfect for those wanting to purchase a car or van but cannot afford to buy it outright. It is also great for those who cover a high annual mileage, because the mileage is not monitored.

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