Hire Purchase (HP)

Frequently Asked Questions

• 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.

• How do the monthly payments work?

  You pay fixed monthly payments over an agreed period of up to 5 years. This gives you complete protection against interest rate rises that may occur. If you use a bank loan to purchase your car and interest rates rise, you could find yourself paying an unexpected higher monthly payment for your car.

  Remember, the more deposit you put down, the lower the monthly payments will be. 

• Is there any added protection when using dealer finance?

  Yes. Known as a voluntary termination this allows you to get out of an HP agreement early. Provided you’ve repaid at least half the total amount owed, you can terminate the agreement and return the car to the finance company.

  This is a handy clause in an HP contract if you find You can’t afford the repayments.

  If you decide to do this, the car should be in good condition when you hand it back. If not, you’ll have to pay for any outstanding repair work that needs doing.

  If you're not yet halfway through the payments, you’ll need to pay the amount outstanding to reach halfway before you can get out of the agreement.

  If you choose a bank or personal loan over hire purchase (HP) finance then you will not receive this important protection.

• What happens at the end of the finance deal?

  Once all repayments have been made, you pay a final fee – referred to as the 'option to purchase' fee – to own the car outright. This covers the cost of transferring ownership to you, and with our lenders is usually between £1 - £10.

• Is HP the right option for me?

  There are so many different options when it comes to buying a car, it can be difficult to choose. We've highlighted the main benefits and pitfalls of choosing HP here:

  Pros

  • You can spread the cost, meaning you can get a better car than if you had to pay upfront.
  • It's simple to arrange and understand.
  • It's flexible – with terms up to 5 years.
  • You would own the car once you’ve made all payments.
  • HP can be easier to get than a standard, unsecured loan for people with poor credit histories (as the car is used as collateral).
  • Your name will be on the V5 registration document as the registered keeper.

  Cons

  • Monthly payments are higher than for PCP deals (View our guide to PCP here).
  • You don’t own the car until you make the final payment.
  • If you fail to keep up payments, the finance company may take the car away (it can do this without a court order until you’ve paid a third of the total amount).
• How quickly can I have the car if I’m using HP Finance?

  All our finance options are extremely simple and efficient to process. Our trained team of experts can process your application in as little as 10 minutes, usually giving you an instant decision and if we have processed your finance application and have a decision from the finance company before 3 pm, then in most cases you can drive your car away the very same day.

  You can also apply on our website by following the on-screen instructions.

• Do I have to put down a deposit?

  You are not required to pay a deposit (subject to credit acceptance). However, if you wish to put down a deposit to further reduce the monthly payments then you may do so.

• What happens if you have a vehicle to part exchange which has outstanding finance?

  No need to worry. We will simply value your vehicle and then need to know the total outstanding amount you owe on your current finance agreement. This is commonly known as your settlement figure.

  If the value of your current car is above the amount you owe then you will have some equity which you can use as a deposit against the finance on the car you are buying.

  If the value of the car is lower than the amount you owe then this is called negative equity. In this scenario, you may be required to put in a deposit to assist with covering this difference. If you cannot afford to pay the difference then in many cases we can assist with this by incorporating this difference in the loan application for the car you are purchasing.  

• How do I apply for finance?

  Applying for finance with our lenders is easy. You can do this on our website in a matter of minutes. Simply, see our “Finance” Page or see the finance calculators on any of our vehicle advert pages. We can assist you over the phone with this too. You can also visit our
  dealership and one of our representatives will assist you with this and advise you on the
  available options.

  
  We will need to see your driving licence as proof of identity. We will also take a photocopy and retain on file.

  
  You will need to have your bank sort code and account number to apply for finance.

• How do I know if I will be accepted for finance?

  We have equipped our website with a pre finance check for you. View our finance page more information on this. You will see that you will be able to carry out a pre finance check which will tell you the likelihood of being accepted or not and this will not harm your credit
  score.

  
  If you are happy then you may proceed to a full application for finance which will involve acredit check. You can complete this in minutes.