HP Car Finance

Apply with no impact on your credit score

Apply with no impact on your credit score

Rates from 7.9% APR. Representative APR 22.09%

Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 22.09%, the monthly payment would be £152.49, with a total cost of credit of £2,319.37 and a total amount payable of £7319.37. CarLoans UK is a broker not a lender.

What Is Hire Purchase Finance?

Before getting into HP car finance deals, it is important to know what HP finance is… To keep it short, Hire Purchase (HP), is a type of fine which allows you to purchase a vehicle by paying for it in monthly installments.

These agreements usually range from 1 to 5 years. 

You will also be able to own the car once all payments have been made to the lender, however, you should be aware an option to purchase fee may be required.

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Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 22.09%, the monthly payment would be £152.49, with a total cost of credit of £2,319.37 and a total amount payable of £7319.37. CarLoans UK is a broker not a lender.

How Does HP Finance Work?

The Initial Deposit

This step isn’t always required. Although, placing down a deposit when completing a car finance agreement is highly recommended.

Repayment Plans

Your monthly repayments equal the total cost of your vehicle, which is then divided by the length of time that your HP car finance agreement last for.

Contract Completion

Upon completion of your contract, the car will then belong to you. You may have to pay an option to purchase fee, this won’t be much.

Is HP car finance the right choice for you?

As mentioned previously, HP car finance is one of the simpler forms of car finance. As well as being one of the more popular car finance choices simply due to the simplicity of the finance agreements. Therefore if you are looking for simple, straight forward car finance deals. HP just might be the right finance option for you. 

There are numerous advantages when choosing Hire Purchase for your car finance deal because.

  • Firstly, due to the simplicity of the agreement. It is easy to understand and set your budget accordingly.
  • Secondly, you will be able to afford a more expensive vehicle than you would have with an upfront cash payment.
  • HP car finance deals are easier to secure with a poor credit rating compared to other forms of finance.
  • You will have the option to own the vehicle once the contract is over.
    Low as well as no deposit options available.
  • Extremely good APR for those with good credit scores.
  • CarLoansUK only works with FCA-regulated dealers, therefore you know you’re in safe hands when you choose HP finance through us.

You should however be aware of the few disadvantages of HP car finance deals.

  • The car may be repossessed if you fail to keep up with your repayment plan.
  • Monthly repayments may be higher than other car finance options such as PCP.
  • You do not actually own the car until the final repayment has been made.
  • No modifications can be made to the vehicle without prior permission.

There are numerous other finance options available to our users.

There are a number of other alternative finance options if Hire Purchase doesn’t seem like the right one for you. With Personal Contract Purchase (PCP). Being the most popular option.

CriteriaPersonal Contract Purchase (PCP)Hire Purchase (HP)Conditional Sale (CS)
The Initial DepositThe Majority of Lenders Will Require A DepositOptionalOptional
Repayment PlanYou Pay Less But Have 3 Options At The End of Your AgreementPayments Are Slightly Higher Than PCP However You Will Own The Car At The End of Your AgreementPayments Are Slightly Higher Than PCP However You Will Own The Car At The End of Your Agreement
Contract Completion• Optional Final Payment - Pay This And Own The Car

• Pay Nothing More And Hand The Car Back

• Trade The Car In, Using Positive Equity To Fund The Deposit For Your Next Vehicle.
A Small ‘Option To Purchase’ Fee, Which You Need To Pay To Become The Legal Owner Of The Vehicle (Maximum £50)No Final Payment, Car Is Yours After The Last Instalment
Fixed Monthly PaymentsYes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.Yes - You Can Make Overpayments Up to 8 Times A Year And Up To £8000. This Reduces Your Term Or Monthly Payments.

Car Finance Comparison In More Detail

At CarLoansUK, we provide numerous amounts of different finance options across our car finance brokerage site. Which then allows you to find the best way to pay with ease. Including but not limited to PCP Car Finance, HP Car Finance or No Deposit Car Finance just to name a few. Because CarLoansUK has got you covered,  don’t believe us? Then take a look at our excellent trust pilot reviews and see for yourself.

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Frequently Asked Questions

A car finance broker is essentially a middle man between the customer and the lender. A car loan finance broker will take care of all of the complicated paperwork as well as the negotiations with lenders. Which essentially means you can sit back and relax knowing that the broker is fighting your corner to get you the best deal possible. All whilst making your car finance journey as stress free as possible. Not only this but car finance brokers such as ourselves, also have deals that aren’t usually available to the general public, and to top it all off. Car finance brokers will actually charge the dealerships instead of the customer.


If you have been refused by other brokers in the past, all is not lost. At CarLoans UK we have a number of finance options for those with bad credit scores. However, you should be aware that when you apply for car finance through us, a hard credit check will be conducted, which may in turn have a negative impact on your credit score. Especially if these credit checks have been done in quick succession. So therefore it is recommended that after being declined for car finance, you should wait between 3-6 months before applying again.

If you are struggling to keep up with your car finance repayment plan. There are a number of options available to you. It is of great importance that you obtain free independent advice from one of the following charities/organisations. 

Money Advice Service

National Debt Line

Citizens Advice

Initially, applying for a car loan usually will have a negative impact on your credit score. Although, you should be aware that if you make your car loan repayments on time. This will most likely have a positive impact on your credit score.


APR stands for annual percentage rate and is the total amount charged for the lend. There are, however, two different types of APR.Exact APR in short means that the rate that is shown to you, is the rate that you will get. Whereas, representative APR however, means that 51% or more of the people who apply for the finance will receive that rate. What this means is that customers with poor credit scores could see a higher APR.

Representative APR is, for the most part, used to advertise the companies rates. After you have provided all of the necessary information to the lender, they can then offer you your exact APR rate.

What is it?

Gap insurance stands for Guaranteed Asset Protection.

Essentially gap insurance is, is a form of insurance that is designed to cover the difference between the amount your insurance provider pays out in the event of your vehicle either being written off or stolen and the price that you paid for the vehicle. You should however be aware that gap insurance works alongside your standard car insurance and is in no way a substitute.

So when is gap insurance needed?

Gap insurance can be worthwhile in several ways. Firstly, if you have taken out a big loan to buy your car. Gap insurance would be beneficial as mentioned previously if your car is stolen or written off. This is because the gap will pay off the outstanding finance.

As well as this, gap insurance could also be beneficial if you are worried about your car depreciating. A brand new car will lose between 15-35% of its value in the first year. Therefore gap insurance can help you get a bigger payout if your car is written off after it has already depreciated.

Where can I get gap insurance?

Comparing gap insurance quotes has never been easier thanks to Bright Compare!

If the vehicle is faulty on delivery, you can simply refuse the car and send it back to the dealership.

You can, however, you will have to ask the finance company for permission prior to making any sort of modifications.

When you select HP finance, you agree to pay the total value of the vehicle, calculated as monthly instalments for the duration of your contract. Because interest and the final fee are added to your payment commitments. Therefore when you have made all agreed payments, you own the car.

Furthermore leasing a car involves monthly payments too, but these are rental payments only. Because the monthly figure you pay when you lease a car is calculated using different criteria such as a set mileage. Then at the end of your lease, the vehicle is returned to the dealership

The Finance and Leasing Association (FLA) offers handy information to help you navigate closed showrooms during lockdown, and beyond. Furthermore their website is well worth a look to help with any lingering lockdown car purchase confusion.

A quick look at their latest statistics reveal the FLA are forecasting a challenging outlook to 2021’s first quarter (1 January to 31 March). Due to ongoing pandemic restrictions and lockdown measures, closing car showrooms nationwide, new car finance declined by 24% last year. Not to mention the latest figures also show FLA members provided £30billion in new finance, and £62billion in new credit since the start of the pandemic in 2020. Therefore car dealerships have adapted in all sorts of ingenious ways to help you continue to access vehicles as normally as possible.

Due to the financial uncertainty surrounding the pandemic, applications for car payment holidays have been extended until 31 March 2021. Car payment holidays are arranged for up to six months, and are a formal arrangement with your HP finance provider.

Defaulting on your car payments is a serious issue, especially if you are committed to a HP finance contract. Because as we mentioned earlier, your car is used to secure the finance deal and if you default or cannot meet your payments, the car may be repossessed. Not to Mention, experts emphasise the importance of contacting your HP finance provider as soon as you are aware that you may experience difficulty in meeting your agreed monthly instalments.

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Rates from 7.9% APR. Representative APR 22.09%

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CarLoansUK © 2022 All rights reserved

Car Loans UK is a trading style of Wallace Bohen Ltd, a company registered in England and Wales. (Company number: 12382512, Registered Address: 4th Floor, Kingsgate, Wellington Road North, Stockport, Cheshire, SK4 1LW. We act as a credit broker and not a lender and are authorised and regulated by the Financial Conduct Authority for consumer credit FCA no.928674. CarLoansUK can introduce customers to a limited number of finance providers based on overall credit profile and may receive a commission for such introductions, this will not impact the rate you are provided. We do not charge a fee to the customer for arranging the finance. Written quotations on request. All finance subject to terms and status Data Protection Registration No.ZA766848.

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