Representative 30.9% APR
Hire Purchase (HP) is a straightforward form of car finance. It works by hiring a car over a pre-agreed period with a path to owning it at the end. This is done without a balloon payment, unlike with PCP agreements. Think of it as a personal loan where you gradually pay the amount off over time. However, you will only officially own the car once you've made your final payment.
It's a popular choice for people looking to purchase a new or used car but lacking the funds to buy one outright. As with any financial option, it's important to understand how the process works and whether it suits your needs.
A Hire Purchase agreement can be applied to other assets too, such as furniture or appliances.
Here's a simplified overview of the process here at First Response Finance:
This is a percentage of the total value of the car paid by you. We'll then lend you the remaining amount. Whether you pay a deposit or not depends on your credit limit and the cost of the vehicle.
The cost will depend on several factors:
Your weekly or monthly repayments will be worked out by dividing the total cost (including interest) by the number of weeks or months in the agreement.
Unlike some other lenders, we make the total transparent and don't charge additional fees outside of the agreement. For example, we don't charge an 'option to purchase' fee, which is often required to own the car outright.
Select the option that best describes your credit rating.
There are no additional fees
Representative
28.9% APRGaining full ownership of the car means the asset is entirely yours, unlike with other financing options. You'll have the freedom to keep, modify and eventually sell it if you choose.
Balloon payments aren't standard with HP agreements, as the total amount will be built into your fixed repayments. This means you won't face a large sum of money at the end of the agreement to buy the vehicle. Your fixed payments will typically be larger than with a PCP agreement, but we can help arrange an agreement that works for your finances.
HP car finance is simple to manage thanks to fixed weekly or monthly repayments. This can help you plan your finances based on consistent payments you've agreed to, making budgeting a lot simpler. We also offer a fixed interest rate to help you stay on top of how much the agreement is costing you.
Browsing new and used cars gives you more freedom when choosing one to buy on HP finance. Many people find the process more affordable as a result, assuming they plan their repayments correctly. We work closely with thousands of dealerships, offering plenty of choice of vehicles.
Annual mileage limits aren't the norm, unlike with PCP agreements. This creates more driving freedom while you make your repayments, which is ideal if you have a long commute or you're unsure how much you'll drive each year.
Making regular, timely repayments can help prove to lenders that you're financially responsible. You can improve your credit score over time as a result, which can help you unlock other forms of credit in the future, from mortgages to personal loans.
Certain lenders, like us, don't always require a deposit for HP car finance. This removes an additional financial barrier at the start of the process. In many cases, PCP car finance requires a deposit.
Like with any type of car finance, it's important to consider the drawbacks as well to make sure you're fully informed.
Not everyone will be eligible for HP car finance. This is why we conduct a thorough application process based on your ability to repay the loan. We look at credit history, income, and other financial factors to establish the level of risk involved. For this reason, HP finance deals aren't for everyone.
Unlike when buying a car outright, you won't be the legal owner until the full amount is paid. HP car finance offers a straightforward path to ownership, but there is a risk of repossession if payments are missed, even if you have paid a significant portion of the total cost.
Unsure if a HP agreement would be suitable for you? Check out some of the benefits and potential drawbacks.
If paying for a car upfront isn't an option and you're set on owning a specific vehicle, HP car finance could be a helpful solution - it provides a straightforward approach to car financing.
HP is ideal for those who prefer to have no mileage restrictions with their vehicle, it offers more freedom as you drive.
Of course, depending on your circumstances, other types of car finance might be a better fit. Take the time to explore your options thoroughly. If you're unsure about which path to take, seeking professional financial advice can help you make the best decision for your situation.
Jonathan, our Head of Sales and Marketing, gives his expert opinion:
"Hire Purchase car finance is ideal for individuals who want to own their vehicle outright at the end of the agreement but may not have the upfront capital to make a full purchase. It's especially beneficial for those who plan to keep the car long-term and want predictable monthly payments. HP can also help individuals looking to build or improve their credit score, as timely payments are reported to credit bureaus."
We offer fixed and flexible elements within our eligibility criteria, all while maintaining a commitment to responsible lending. Here's what we look for when it comes to Hire Purchase car finance:
While our criteria helps us to lend responsibly, we're flexible on things such as the age of the car and the length of the agreement. For example, you can choose to repay your car loan over a long period, i.e. 61 months, or you can make larger instalments and pay your finance off in as little as 18 months.
We’re authorised and regulated by the Financial Conduct Authority (FCA).
We're committed to treating customers fairly and giving clear, honest information so you can trust us to put your best interests first every step of the way!
Apply for HP car finance today and enjoy flexible payments with no mileage limits!
We stand out from other providers, offering you a more personalised experience. Here's why you can count on us to help you secure HP car finance that works for you:
Get a free quote today with no impact on your credit score. Let's help you get the car you really want!
This page was last reviewed in July 2025.
First Response Finance is a responsible vehicle finance lender, and all decisions are made in the best interests of the customer; based on credit scores, status, and income at the time of application. We'll never approve an application if we believe you might struggle with repayments.
Get independent advice on money, finance products, debt management, and budgeting through Citizens Advice and MoneyHelper.
