Affordable HP Finance
Rates from 9.9% APR. Representative APR 19.2%. Smooth Car Finance is a credit broker, not a lender.
Flexible HP payment plans at competitive rates
What is hire purchase finance?
Hire purchase (HP) is a popular financing option that allows individuals or businesses to own a vehicle by making regular payments over a fixed period of time.
With hire purchase, you can spread the cost of buying a car without paying the full price upfront, making it an affordable option for many people to acquire the car, van or any other vehicle they want.
How does HP finance work?
1. Deposit: Typically, you start a hire purchase by paying a deposit of around 10-20% of the vehicle’s price.
2. Fixed monthly payments: The remaining balance is then paid in fixed monthly instalments over an agreed period, often between 1 to 5 years. These payments cover both the principal amount and interest.
3. Interest rate: An interest rate applies to the financed amount, affecting the total cost over time. Rates may be fixed or variable, depending on the terms of the Hire Purchase agreement.
4. Ownership transfer: Unlike vehicle leasing, you gain full ownership of the vehicle once the final payment is made, meaning each instalment brings you closer to owning the car.
Key features of HP finance
- No mileage limits: Hire purchase agreements generally don’t have mileage limits, so you have the freedom to drive as much as you like without penalties.
- Option to purchase: After all the monthly payments are made most hire purchase contracts include a small “option-to-purchase” fee at the end, finalising the transfer of ownership.
- Secured loan: The vehicle itself serves as collateral, so it’s essential to keep up with payments to avoid the risk of repossession.
What are the advantages and disadvantages of HP finance?
Advantages of hire purchase:
- Spread cost: You can spread out the cost of the vehicle over time, making payments more affordable.
- Eventual ownership: After the final payment, the vehicle is all yours.
- Flexible terms: Hire purchase agreements often allow flexibility in deposit amount and payment length, so you can choose terms that work for you.
Disadvantages of hire purchase:
- Higher total cost: Due to interest, the total amount paid over the term will typically be higher than the vehicle’s initial price.
- Delayed ownership: Ownership is only granted once all payments are complete.
- Risk of repossession: If payments are missed, the lender can repossess the vehicle since it serves as collateral.
Can you get HP finance with bad credit?
Even with a poor credit history, you may still be able to secure HP finance. While you might face higher interest rates, it's a viable option to own a car. Consistent on-time payments can even help improve your credit score over time.
At Smooth Car Finance, we aim to work with a wide range of lenders to help find you good affordable HP finance deals, regardless of your credit history.
What is the difference between HP finance and a loan?
Unsure whether HP finance or a personal loan is right for you? Let's break it down:
Ownership
- HP finance: You'll own the car at the end of the loan term.
- Personal loan: You own the car immediately after purchase.
Flexibility
- HP finance: Less flexible, as the car is technically the lender's until you finish paying.
- Personal loan: More flexible, as you own the car outright, allowing for easier selling or modification.
Cost
- HP finance: Often offers lower interest rates, making monthly payments more affordable.
- Personal loan: Typically has higher interest rates, potentially leading to higher overall costs.
Consider your financial situation and long-term goals to determine the best option for you. A car finance calculator can help you compare monthly payments and total costs.
Can you end your hire purchase agreement early?
Hire purchase agreements offer helpful flexibility if your situation changes and you’d like to end the agreement early:
- Request a settlement figure: You can reach out to your lender to request a settlement figure, which is the amount needed to fully pay off the remaining balance on your agreement.
- Sell or trade-In: If you decide to sell or trade in the vehicle, any value above the settlement figure can either go toward the deposit for your next vehicle or be received as cashback.
- Voluntary termination: If you’ve paid at least 50% of the total amount owed, including interest and fees, you may be eligible to voluntarily terminate the agreement and return the car without further payments. This option is helpful if you’re facing challenges with payments but want to avoid future financial obligations.
This flexibility makes hire purchase a great option that can adapt to your changing needs, helping you make choices that work best for you.
Is hire purchase right for you?
Vehicle hire purchase is a practical solution for those who want to own a car without a large upfront payment. Just be sure to review the interest rates and terms to ensure it aligns with your financial goals and budget.
What do I need to apply for car financing?
To make an application for car finance, we need very little data:
- Full name and driving licence
- Employment details
- Residential status and address
- Mobile number and email address
You have to be between 18 and 75 years old, be a UK resident for at least 12 months, and receive a monthly income of at least £1,000.
Why should I use Smooth Car Finance?
Make everyday life easier with affordable car finance
At Smooth Car Finance, we believe a car shouldn't just be a purchase, it should improve your life. Need a reliable ride for the school run? A spacious car for grocery shopping? Or simply a vehicle you're proud of?
We work hard to find you the best eligible deal from our trusted lenders, regardless of your situation. Good credit, bad credit, self-employed, on benefits, or even declined elsewhere – we consider all circumstances.
Plus, you'll get a dedicated account manager to guide you through the process and help you find the perfect car to fit your needs.
Have you got approved?
A dedicated account manager will guide you through the next steps, answer your questions, and help you find the perfect car to fit your needs.
Already have a car in mind?
No problem. Let us know and we'll aim to expedite the loan application.
Need more info before you get started?
We're here to help! Just contact us today.
Car finance loan calculator
*Please note that if you proceed with your quote, a hard credit check will be performed, which may affect your credit score.
Representative example: borrowing £6,500 over 5 years with a representative APR of 19.9%, an annual interest rate of 19.9% (Fixed) and a deposit of £0.00, the amount payable would be £166.07 per month, with a total cost of credit of £3,464.37 and a total amount payable of £9,964.37. We compare multiple lenders to help find the best rate available from our panel and offer you the best deal you're eligible for. We earn a fixed or percentage-based commission on the finance agreement, which will not affect your interest rate or total repayment amount. The full commission details will be provided in the commission disclosure document before proceeding with the finance agreement.
HOW IT WORKS
Our Process Is Simple...
Tired of complicated, time-consuming finance processes? We make it quick and straightforward with our three-step approach:
Apply and get approved
Approval takes just minutes. Complete our simple online application, we’ll instantly compare rates and aim to find the best deal for you.
Choose your car from any dealer
Whether you’ve already found your dream car or need help sourcing it, we’ll manage everything for you, from dealer communication to thorough vehicle checks, ensuring a seamless buying experience.
Hit the road in no time
Once the paperwork is sorted, it’s time to collect (or have delivered) your new car. Getting behind the wheel has never been easier.
Frequently Asked Questions
What is hire purchase (HP) finance?
Hire purchase allows you to spread the cost of a car over a fixed period, with the option to own it outright at the end of the agreement once all payments are made. It is an affordable alternative to buying a car upfront.
Can I end my HP agreement early?
HP agreements offer flexibility. You can request a settlement figure, sell or trade in the vehicle, or, if you've paid at least 50% of the total amount owed, you can voluntarily terminate the agreement and return the car.
Can I get HP finance if I'm self-employed or on benefits?
Smooth Car Finance works with a wide range of lenders who consider all circumstances, including self-employed individuals or those on benefits. As long as you can demonstrate a reliable income and meet the basic eligibility criteria, you can still qualify for HP finance.
What is the difference between HP finance and a lease?
HP Finance allows you to own the vehicle outright once you've made all the payments. With leasing, you never own the car, and you return it at the end of the term. HP is ideal if you want long-term ownership, while leasing suits those who prefer to switch cars regularly.
Do I own the car immediately after the first payment?
No, you don’t own the car until you make the final payment on your HP agreement. Until then, the car remains the lender’s property, and they can repossess it if you miss payments. However, you have the right to ownership once the final instalment is made.