Car funding methods
Hire Purchase (HP)
The straightforward way to finance a car and own it outright at the end. Higher monthly payments than PCP — but simpler, more transparent, and you end up with something to show for it.
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What is HP?
Hire Purchase is one of the most straightforward forms of car finance. You pay a deposit, then make fixed monthly payments over an agreed term — typically 2 to 5 years — and at the end of the agreement, you own the car outright. No balloon payment, no decision to make, no mileage limits.
Unlike PCP, you’re financing the full value of the car (minus your deposit), which is why monthly payments are higher. But you’re also building equity in the vehicle throughout the agreement — and at the end, it’s yours.
HP is regulated under the Consumer Credit Act 1974, which gives you important protections — including the right to voluntarily terminate the agreement once you’ve paid at least half the total amount payable, and Section 75 protection against faulty goods.
For drivers who plan to keep their car for several years, HP often works out cheaper overall than PCP — particularly when you factor in the balloon payment on a PCP deal.
How HP works
Three straightforward stages — and at the end, the car is yours.
Interactive cost explorer
See how the numbers work for your situation
The chart shows the car depreciating over time against your outstanding balance — which falls to zero at the end of the term, when the car is yours.
Car value
Balance owed (falls to zero)
Illustrative figures only. Calculations use estimated depreciation rates based on UK market averages and are for general educational purposes only. They do not constitute a regulated credit illustration, a personal recommendation, or an offer of finance. Actual payments will vary. Always obtain a formal written quotation from an FCA-authorised lender before entering into any finance agreement.
HP vs PCP — the key differences
Understanding these differences is essential before you choose.
The pros and cons
Advantages
- You own the car at the end — no balloon payment, no decision
- No mileage limits or condition restrictions during the agreement
- Simpler and more transparent than PCP
- Often cheaper overall than PCP for drivers who keep their car long-term
- Section 75 protection and voluntary termination rights apply
- Building equity in the vehicle throughout the agreement
Disadvantages
- Higher monthly payments than PCP for the same car and term
- You don’t own the car until the final payment is made
- Less flexibility — you’re committed to buying the car
- APRs on HP are typically higher than manufacturer-subsidised PCP rates
- Less access to manufacturer deposit contributions
- If you want to change car early, you’ll need to settle the finance first
The Odigo Verve view
HP is often underrated — and underused
Dealers push PCP because the lower monthly payment makes it easier to sell a more expensive car. HP is less exciting to present — but for drivers who keep their car for more than three years, it’s frequently the better financial decision.
We’ll run the numbers across all your options — including salary sacrifice if you’re eligible — so you can see the true total cost of each approach before you commit to anything.