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Hire Purchase Calculator
HP is the simplest car finance product: fixed monthly payments, no balloon, you own the car at the end. Enter your numbers below.
Your details
PCP result
Total Amount Payable
£29,386.98
This is the total that leaves your account — deposit + all payments + balloon
Representative Example
HP costs more per month, but you actually own the car.
On a £20,000 car at 6.9% APR over 48 months, HP costs ~£477/month with total interest of ~£2,900. The same car on PCP might cost £299/month — but there's a £10,000 balloon waiting at the end, and total interest is higher.
How Hire Purchase works
HP is a secured loan against the car. You pay a deposit (typically 10%), then equal monthly instalments for the agreed term (usually 24–60 months). The car acts as collateral — the finance company owns it until you make the final payment. After that, it's yours.
There are no mileage limits, no balloon payment, and no end-of-term decision to make. HP is what most people think of when they say "buying on finance."
HP vs PCP — the real maths
| Metric | HP | PCP |
|---|---|---|
| Monthly payment | Higher | Lower |
| Balloon payment | None | Yes (GMFV) |
| Total cost of credit | Usually lower | Usually higher |
| Mileage limits | None | Yes, with excess charges |
| Ownership at end | Automatic | Only if you pay the balloon |
| Voluntary Termination | After paying 50% of TAP | After paying 50% of TAP (inc. balloon) |
When HP is the right choice
- You plan to keep the car. If you'll drive it for 5–10 years, HP gives you clean ownership with no balloon.
- You drive high mileage. No mileage restrictions. 20,000+ miles a year without penalty.
- You want to minimise total interest. Because you pay down the full balance from month one, total interest is lower than PCP at the same APR and term.
- You want simplicity. Fixed payments, fixed term, car is yours at the end.
When HP isn't ideal
- You want the lowest monthly payment. PCP will always beat HP on monthly outgoings for the same car.
- You change cars every 2–3 years. PCP's built-in trade-in cycle suits frequent changers better.
- You qualify for a cheap personal loan. Banks offer unsecured loans from 3–5% APR for good credit on amounts between £7,500 and £25,000. If you qualify, that beats HP on rate.
Early settlement
You can settle an HP agreement early at any time. The lender must provide a settlement figure within 12 working days of your request. Under the Consumer Credit Act, you're entitled to a rebate of future interest. Agreements after 2011 must use the actuarial method for calculating the rebate, which is fairer than the old Rule of 78.
The option-to-purchase fee
Most HP agreements include a small fee at the end — usually £1 to £10. Technically, the finance company owns the car until you exercise this option. It's a formality, but you don't legally own the car until it's paid and the V5C updated.