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How does HP Car Finance work?

Hire Purchase (HP) agreements allow you to spread the costs of your new car over one to five years and take full ownership at the end of the term.

Hire Purchase is the ideal funding solution is you want to own the vehicle at the end of the finance agreement. HP splits the whole cost of the car into fixed monthly payments and a deposit at the start of the agreement - with you taking official ownership of the car as soon as you've made the last monthly payment.

While HP finance agreements often have higher monthly payments and deposits than other finance deals, you will avoid needing to pay a hefty lump sum at the end of the contract (GFV or Final Optional Payment) as you do with PCP.

Until you take ownership of the vehicle the finance company officially owns the car, but, as the registered keeper of the car, you will be responsible for insuring and maintaining it. A Hire Purchase holds lower risk for the finance company than other types of loans, as the lender is secured against the car. This means HP is sometimes available to individuals who have been turned down a regular loan.

What are the benefits of HP car finance?

HP car finance is ideal for you if you want to own the vehicle but would rather split the payment costs over a few years instead of paying the outright. Additionally, you can settle the agreement at any time by paying the remaining costs.

  • Hire Purchase loans are fast and easy to arrange.
  • Sometimes easier to get HP loans than standard, unsecured loans for people without perfect credit histories as the vehicle is used as collateral.
  • A more cost-effective method of new car ownership spread the cost over flexible terms of one to five years.
  • You can terminate the agreement and return the car after repaying at least half of the amount owned if you decide you no longer want or need the car.
  • You can pay off the entire loan at any time if you choose to and take ownership of the vehicle without any additional fees.

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