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.

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.

Most Popular

Best plug-in hybrid SUVs 2021
DS 7 Crossback E-TENSE
Best cars

Best plug-in hybrid SUVs 2021

A good plug-in hybrid SUV should combine low running costs with excellent practicality. These are some of the best on sale right now
8 Apr 2021
Where can I buy hydrogen and where is my nearest hydrogen filling station?
Mercedes fuel cell
Your questions answered

Where can I buy hydrogen and where is my nearest hydrogen filling station?

A guide to where you can find UK hydrogen fuel stations for filling up a hydrogen fuel-cell car
7 Apr 2021
Best electric SUVs 2021
Kia e-Niro
Best cars

Best electric SUVs 2021

Our selection of the best electric SUVs you can buy features cars that promise to mix style, practicality and rock-bottom running costs
8 Apr 2021