Skip advert
Advertisement
Your questions answered

Buying an electric car on hire purchase (HP) explained

Hire purchase finance remains a very popular way of buying a car in the UK. This is how it works

Car finance delaer

One of several ways to buy a car on finance, a hire purchase (HP) agreement is a bit like a loan. The cost of the car is divided into a series of equal payments over a set period, usually three, four or five years, minus any deposit you put down. The interest rate is fixed for the duration of the agreement, so even if interest rates rise, your payment won’t. HP is normally easy to arrange at the dealer or car supermarket, but it’s also possible to do it online or over the phone.

Advertisement - Article continues below

Once you’ve made the final payment, you own the car. It’s a very transparent way to buy a vehicle, but many buyers are put off because the monthly cost is higher than with a PCP. However, it does tend to work out cheaper than an unsecured personal loan and, unlike a PCP, there’s no final lump sum to pay.

You need a deposit for HP, which is usually around 10% of the car’s list price. Sometimes, to encourage a sale, dealers add a deposit contribution to sweeten the deal. If a car is nearing the end of its time in production, you might even get a zero-deposit deal.

As hire purchase is secured against the car, if you don’t keep up repayments, the car could be repossessed. This is why HP is also more favourable for people with poor credit ratings, as there’s less risk to the lender.

Skip advert
Advertisement
Skip advert
Advertisement

Most Popular

Top 10 best electric cars 2024
Best electric cars
Best cars

Top 10 best electric cars 2024

From SUVs to sports saloons, we run through the best electric cars you can buy right now
24 Oct 2024
​Top 10 best small electric SUVs 2024
DrivingElectric best small SUVs
Best cars

​Top 10 best small electric SUVs 2024

Small electric SUVs are steadily increasing in popularity thanks to low running costs, practicality and more choice. We run down the best ones for 202…
30 Oct 2024
Omoda E5 review
Omoda E5 - front tracking
In-depth reviews

Omoda E5 review

Omoda’s debut on the UK’s EV market is a pretty promising one
24 Oct 2024