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

Fisker PEAR: first look at £25,000 electric city car
Fisker PEAR spy shot
News

Fisker PEAR: first look at £25,000 electric city car

The cut-price EV is due to be unveiled in the second half of 2023 and offer up to 310 miles of range
2 Feb 2023
New electric cars coming in 2023 and beyond
Polestars under cover
Coming soon

New electric cars coming in 2023 and beyond

With electric cars making up an ever-increasing proportion of sales, the industry is working flat out to launch new models – here's what's on the way …
3 Feb 2023
New XPeng G9 electric SUV: prices, specs and range
XPeng G9 flagship electric SUV
News

New XPeng G9 electric SUV: prices, specs and range

Chinese flagship electric SUV offers over 350 miles of range and is due to land in the UK by 2025
3 Feb 2023