What is hire purchase (HP)?
Hire purchase (HP) is a type of vehicle finance. Hire purchase agreements let you finance the entire vehicle cost over a fixed period. Usually, you'll pay a portion of the total amount owed upfront as a deposit, then the outstanding balance and interest will get split into monthly payments, usually between one and five years. HP is usually more expensive than PCP for the same car, but doesn't have a balloon payment at the end of the agreement.
Learn more about HP car finance, an ideal option for car buyers who want to own the car at the end of the agreement and doesn’t include a big optional final payment.
Related glossary terms
PCP - personal contract purchasePersonal contract purchase (PCP) is a type of vehicle finance. PCP finance usually sees you pay a portion of the total amount upfront as a deposit, then a series of monthly payments, often over a two-to-four-year period.PCH - personal contract hirePersonal contract hire (PCH) is a form of vehicle finance, widely known as leasing. This means you essentially take out a long-term rental agreement on the car, with an initial rental payment and fixed monthly payments usually between one and four years.Car loanA car loan (or personal loan from a bank or building society) is another car finance option. You get a lump sum of money which can be used to pay for a car outright, and you’ll need to repay the bank over an agreed number of months.