How does Hire Purchase work?

HP is similar to a standard bank loan when you're paying it but affords you added protection a bank loan doesn’t give you.

So, the first difference between HP and a standard bank loan is that while you're paying off the finance, the finance company STILL owns the car. It's only once you've made ALL the payments that ownership transfers to you.

The second key difference is that HP finance ensures the debt is secured against the car. So, if your circumstances change and you can’t make the monthly payments, the finance company could repossess the car to help pay off your debt. Compared to a standard bank loan, where the debt is unsecured and if you cannot afford to make the repayments the bank will have the right to repossess your personal property to recover their debt plus costs, leaving you open to far greater risk.