Hire Purchase Calculator

Hire Purchase (HP) is one of the most straightforward ways to finance a car in the UK. You pay a deposit, then fixed monthly payments over a term of typically one to five years. Each payment chips away at the full value of the car plus interest, and once the final instalment is paid the car becomes yours automatically. Unlike Personal Contract Purchase (PCP), there is no large optional "balloon" payment at the end, and unlike a Personal Contract Hire (PCH) lease, you end up owning the vehicle outright. This calculator works out the figures that matter before you sign. Enter the car price, your deposit, the APR from your quote and the term in months, and it returns the monthly payment, the total interest you will pay, and the total amount payable over the agreement. Because HP repays the entire value of the car rather than just its depreciation, monthly payments are usually higher than an equivalent PCP deal -- but the total cost of credit is often similar or lower, and you are not left with a big lump sum to find at the end. Typical APRs in the current market range from around 4-8% for borrowers with strong credit up to 12-15% or more for sub-prime applicants. A larger deposit reduces the amount financed and therefore both your monthly payment and the interest you pay. You can shorten the term to pay less interest overall, or lengthen it to reduce the monthly cost at the expense of more interest. HP is regulated by the FCA. You have early settlement rights (the outstanding balance less an interest rebate) and Voluntary Termination rights under the Consumer Credit Act 1974, which let you hand the car back without further liability once you have paid at least 50% of the total amount payable. For an unsecured personal loan instead of secured car finance, use the Loan Calculator; to compare HP against PCP and leasing, use the Car Finance Calculator; and for the full cost of ownership including fuel, insurance and tax, see the Car Running Cost Calculator.