The true cost

HP Calculator: Hire Purchase Payments Explained

Work out Hire Purchase monthly payments and the total cost — no balloon, you own the car at the end.

IndependentWe sell no financeNo commissionMaths based on FCA rules & the Consumer Credit Act 1974

The True CostHP

Monthly payment

£452.02

Total amount payable

£23,707

over the term

Amount financed: £18,000
Deposit: £2,000
Option-to-purchase fee: £10
Total interest: £3,697

Your monthly payment is only half the story — the total is what you actually hand over. Figures are estimates; your real quote depends on the lender and your credit.

How we work this out

Monthly = amount financed × monthly rate ÷ (1 − (1 + monthly rate)^−term). Total payable = deposit + payments + a small option-to-purchase fee. Total interest = payments − amount financed.

Full method: how we calculate.

SourcesConsumer Credit Act 1974

HP (Hire Purchase) is car finance where you pay off the whole price in equal monthly instalments, and own the car once the final payment is made. This calculator shows the monthly payment and the total amount payable.

What is HP car finance?

HP is car finance where the whole price is spread over fixed monthly payments, and the car becomes yours once you've made them all. There's no balloon to worry about.

Because you finance the full price rather than just the depreciation, HP costs more per month than PCP — but you own the car outright at the end.

How does hire purchase work?

HP works in three simple steps.

Put down a deposit — the bigger it is, the lower the monthly and the less interest you pay.
Pay equal monthly instalments across the term, usually 2 to 5 years.
Pay a small option-to-purchase fee with the last instalment, and the car is yours.

Do you own the car with HP?

Yes — you own the car once you've made the final payment and the small option-to-purchase fee. Until then, the lender legally owns it, so you can't sell it without settling first.

Worked example

A £20,000 car with £2,000 down over 48 months at 9.9% APR costs about £452 a month, for a total of around £23,695 — roughly £3,695 in interest. The car is yours at the end.

HP vs PCP: what's the difference?

HP finances the whole car and you own it; PCP finances the depreciation and ownership is optional. HP costs more monthly but usually less overall.

Read the full comparison in PCP vs HP vs leasing, or compare with PCP.

HP vs PCP
	HP	PCP
Monthly	Higher (≈ £452)	Lower (≈ £314)
Balloon?	No	Yes (GMFV)
Own it?	Yes, at the end	Only if you pay the balloon
Total to own	≈ £23,695	≈ £25,086

Settling HP early and voluntary termination

You can pay off HP early and save interest, or hand the car back once you've paid 50%.

Work out the cost to clear it with the settlement calculator. HP also carries the voluntary termination right under the Consumer Credit Act 1974 — once you've paid half the total amount payable, you can return the car and owe nothing more.

Was your HP agreement mis-sold?

HP deals from 2007–2024 can also carry hidden commission claims. If a broker raised your rate for a bigger commission, you may be owed redress.

Estimate your position with the compensation estimator — an estimate, not a promise, and free to claim yourself.

Frequently asked

What is HP car finance?

HP (Hire Purchase) is car finance where you pay off the whole price in equal monthly instalments, and own the car once the final payment and a small option-to-purchase fee are made. There's no balloon payment.

Do you own the car with HP?

Yes. You own the car once you've made the final monthly payment and the option-to-purchase fee. Until then the lender legally owns it, so you can't sell it without settling the finance first.

Is there a balloon payment on HP?

No. HP has no balloon. You finance the full price over the term, so there's nothing extra to pay at the end beyond a small option-to-purchase fee, and the car becomes yours.

What's the difference between HP and PCP?

HP finances the whole car in equal instalments and you own it at the end. PCP finances only the depreciation, keeps the monthly lower, and makes ownership optional via a final balloon payment. HP usually costs less overall.

Can you settle HP early?

Yes. You can pay off HP early to save interest, with a statutory rebate under the Consumer Credit Act 1974, or use voluntary termination to hand the car back once you've paid 50% of the total amount payable.

Work out your next step

Independent calculators — pick the one that fits your situation.

What is HP car finance?

HP is car finance where the whole price is spread over fixed monthly payments, and the car becomes yours once you've made them all. There's no balloon to worry about.

Because you finance the full price rather than just the depreciation, HP costs more per month than PCP — but you own the car outright at the end.

Do you own the car with HP?

Yes — you own the car once you've made the final payment and the small option-to-purchase fee. Until then, the lender legally owns it, so you can't sell it without settling first.

Worked example

A £20,000 car with £2,000 down over 48 months at 9.9% APR costs about £452 a month, for a total of around £23,695 — roughly £3,695 in interest. The car is yours at the end.

HP vs PCP: what's the difference?

HP finances the whole car and you own it; PCP finances the depreciation and ownership is optional. HP costs more monthly but usually less overall.

HP vs PCP
	HP	PCP
Monthly	Higher (≈ £452)	Lower (≈ £314)
Balloon?	No	Yes (GMFV)
Own it?	Yes, at the end	Only if you pay the balloon
Total to own	≈ £23,695	≈ £25,086

Settling HP early and voluntary termination

You can pay off HP early and save interest, or hand the car back once you've paid 50%.