Hire Purchase

Hire Purchase is… a hiring agreement between a customer and a finance company secured against the vehicle, where the customer has the option to own the vehicle at some point during or after the agreement. The finance company HIRES the vehicle to the customer for an agreed period of time at an agreed monthly sum. The customer can gain ownership (title to the car) by paying an additional sum called the Option to Purchase Fee. The customer must, however, have paid everything else off to get title to the vehicle.

A Hire Purchase (HP) agreement is one of the most common ways of funding a vehicle purchase. It is normally a fixed cost, fixed period loan linked (or secured) to the purchase of a vehicle.

Hire Purchase facilities typically include the following factors:


A deposit is normally optional (or a minimum/ maximum amount may be set by the lender) and can be paid in cash or if the customer trades in an old vehicle(s) as a part-exchange. This reduces the finance company’s risk and also reduces the amount borrowed (and payments) by the customer.


There is usually an arrangement fee charged by the lender and any fees can be included as part of the regular repayments. The fee amount is set by the individual lender.

Regular Payments

The customer agrees to make regular payments to the finance company under the terms and conditions of the agreement and
should keep the vehicle fully comprehensively insured and in roadworthy condition.
There are no mileage restrictions under an HP agreement. However, lenders may impose certain restrictions on the use and location
of the vehicle. For example, the vehicle may not be used by certain businesses or taken outside the European Union or for hire/reward.

Option to Purchase Fee

The Option to Purchase fee (determined before the agreement is entered into) transfers title to the customer after all payments have been made. The amount is set by the individual lender and is usually paid by the customer with the final payment. However, if the customer chooses not to exercise this option the lender will retain title to the vehicle.


Hire Purchase is not a funding options we are able to offer via our website. Please contact a Leasing Consultant on 01565 880899 for further details, please complete the below "Ask About Finance" form.

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