Fixed monthly payments
Know what you’ll pay each month from day one
No need to watch your miles
Drive without checking mileage limits or worrying about fees
Own the car at the end of the agreement
No big final payment before the car becomes yours
We offer loans from FCA-regulated providers including:
Showing providers 1 to 8 of 11
Hire purchase (HP) – also known as HP car finance – is a type of finance that lets you spread the cost of buying a car, typically over one to five years.
You put down a deposit (usually 10% of the price) and make monthly repayments, plus interest, until the full value of the car is repaid. Pay a small final fee known as the ‘option to purchase’ and the car is yours to keep.
10% is standard, although it isn’t always necessary. But the higher your deposit, the less you need to borrow.
Your monthly payment will depend on the size of your deposit, the cost of the car, the interest rate and how long you sign up for. Make sure you never borrow more than you can afford to pay back.
After your last monthly repayment, you pay a final one-off fee of around £10-£200 and become the owner of the car. The fee covers the admin cost of transferring ownership to you.
The cost of hire purchase depends on the price of the car, your deposit, the interest rate and how long the agreement lasts.
Here’s an illustrative example of how the costs might break down if you bought a £12,000 car on hire purchase with a three or five-year deal, putting down a £1,200 deposit (based on Compare the Market’s representative 7.4% APR^).
A longer term usually lowers your monthly payment but increases the total interest you pay.
After your final repayment, you pay the option to purchase fee and take ownership of the car.
Three-year deal | Five-year deal | |
|---|---|---|
Amount borrowed | £10,800 | £10,800 |
Monthly repayment | £334.27 | £214.68 |
Total interest | £1,233.72 | £2,080.80 |
Total amount payable | 12,033.72 | 12,880.80 |
^Representative example: Borrowing £7,500 over 48 months on a personal loan at a fixed interest rate of 7.4% p.a. results in monthly payments of £180.99 and a total repayable of £8,687.61. Representative 7.4% APR (fixed). Correct as of September 2026.
Flexible payments – you choose a repayment period that suits you, typically from one to five years. Spreading the cost can make monthly payments more manageable, but remember you’ll pay interest on top.
No mileage restrictions – you can drive as many miles as you like, unlike with personal contract purchase (PCP).
You only pay a small fee to own the car – after your final repayment, you only pay around £10 to £200 to become the owner. With PCP, you have to make a large balloon payment (often £1,000s) to own the car outright.
Higher monthly payments – monthly payments tend to be higher than PCP finance and leasing deals over the same agreement period.
Car modifications are off limits – you can’t modify or sell the car until you’ve paid it off, unless you get permission from your finance provider.
Delayed ownership – you won’t own the car until the option to purchase fee is paid. If you can’t meet your repayments, the finance provider can seize the car.
Limited options to switch cars – you may have to pay a fee if you want to change to a different car before the end of the agreement.
Bear in mind
A brand-new car loses a chunk of its value the minute you drive it off the forecourt and could depreciate by 15%-35% by the end of the first year
Compare offers from different lenders and look at the total cost, not just the monthly payment. Here’s what to check:
Compare offers from lenders and brokers as well as the dealership’s finance offer.
The APR represents the total cost of borrowing for a year, including interest and standard fees.
At least 51% of people who take out the finance deal must get the representative APR or lower, so you might be offered a higher rate depending on your circumstances and credit history.
Check for additional charges, such as a broker fee, an admin fee, or the option to purchase fee.
When you apply for an HP loan, the lender will carry out a hard credit search, which leaves a mark on your credit file. Comparing with us first uses a soft search, so your credit score won’t be affected.
Your credit score is one of the main things lenders look at when deciding:
Whether to approve your application
What APR to offer you
How much you can borrow.
If you’re looking for a new set of wheels but have a poor credit history, you may still be able to get car finance. If your score is low, it’s worth taking steps to build your credit score before you apply.
Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
Yes, you can usually pay off your hire purchase deal early.
Ask your lender for a settlement figure, which is the amount you’ll need to pay to end the agreement. It may include an early settlement fee, but the amount a lender can charge is capped by law. Your HP loan agreement should set out the details.
If you can’t pay the settlement figure in one go, you could look at refinancing your car loan.
There are several ways to pay for a car, including personal contract purchase (PCP), a personal loan, car leasing or cash savings.
Check out our at-a-glance guide to help you decide on the best car finance option.
Understand the different car finance options so you can choose the best product for you
If you fall behind with your payments, you’ll break the terms of your agreement. You could be charged extra fees, and missed payments may affect your credit score.
The lender owns the car until you’ve made your final payment, so it can take action to get the car back. It will usually need to send you a default notice first, giving you time to catch up.
Once you’ve paid at least a third of the total amount payable, the lender usually needs a court order to repossess the car.
Yes, it’s possible to change your car while you’re still tied into a hire purchase contract. You have two options:
1. Trade it in for a new model: car dealerships will usually offer you the chance to trade in your car and swap it for a different model. But you’ll need to settle your existing finance. Your current car’s value can contribute to this. Anything left over could be used towards the new car.
2. Settle the agreement: this is simply ending your hire purchase agreement early. You’ll normally have to pay an early settlement fee, which will be listed in your HP loan agreement. You’ll then own the car, which you could sell and use the money to buy a different one.
No, you can’t sell a car that you’ve purchased on an HP contract. This is because you don’t own the car until you’ve settled the agreement. You’ll need to settle the agreement early before you can sell it.
You might be able to modify a car on HP finance. You’ll need to check the terms of your hire purchase agreement and speak to your finance provider first.
Voluntary termination is your legal right to end a hire purchase (HP) agreement early by writing to your lender and returning the car.
You must pay any instalments and arrears due up to that point. If your total payments (including your deposit) add up to less than 50% of the total amount payable, you must pay the difference to reach that 50% mark.
If you’ve already paid 50% or more, you won’t owe anything further, as long as the car is in good condition for its age.
If you’re struggling with payments and need help with debt, free advice is available from Citizens Advice and MoneyHelper.
If you buy a car on a hire purchase deal and there’s something wrong with it:
Return it to the dealer and ask for it to be repaired
If they refuse to repair it, contact your HP finance provider (though this may be the same company).
Your finance provider legally owns the car until you’ve settled your agreement. This means it's responsible for the car and any issues it might have.
Charlie is a senior commercial leader with almost a decade's experience across the UK’s leading personal-finance and comparison platforms. Before joining Compare the Market as Head of Commercial in 2024, he held senior commercial roles at TotallyMoney and MoneySuperMarket Group.
1 Based on the % of respondents claiming they have used Compare the Market in the last 12 months vs. other leading PCWs. Source: Savanta BrandVue Financial Services, National Representative Survey of 12,221 respondents (September 2026)
