HP Calculator
Estimate your Hire Purchase (HP) monthly payments. HP spreads the full cost of the car over fixed monthly instalments with no balloon payment at the end — you own the car once the final payment is made.
Reviewed by Richard Ross · Last updated April 2026
How HP Calculator works
How the HP calculator works
Hire purchase spreads the full cost of the car over the term. The calculator takes the vehicle price, subtracts your deposit to get the amount financed, then applies the standard annuity (amortising loan) formula using your APR and the number of months to produce a fixed monthly payment. Total interest is the sum of all monthly payments minus the amount financed; total repayable adds your deposit back on so you can see the complete cash cost. Unlike PCP, there is no balloon payment held back — every instalment chips away at the full balance, so the car is fully paid off at the end of the term. The output is an estimate; your actual agreement depends on the lender’s APR, any fees, and the exact term offered.
Hire purchase versus PCP and a personal loan
HP monthly payments are higher than PCP for the same car and term because you are repaying the entire amount financed, not just the depreciation. In exchange, the total cost is often lower than PCP — there is no large balloon sitting on the balance accruing interest — and you automatically own the car at the end. Compared with a personal (unsecured) loan, HP is secured against the car, which is why dealers can offer it on almost any vehicle regardless of age or mileage, and why rates are sometimes lower. The trade-off is that the finance company owns the car until the final payment, so you cannot sell it without settling the agreement first.
Ownership, early settlement, and voluntary termination
With HP the finance company is the legal owner until you make the final payment, at which point title passes to you (an option-to-purchase fee is sometimes charged with the last instalment). You can settle the agreement early at any time and are entitled to a statutory rebate of part of the future interest under the Consumer Credit (Early Settlement) Regulations 2004, so the settlement figure is less than the sum of the remaining payments. HP is also a regulated hire-purchase agreement, so you have the voluntary termination right under sections 99 and 100 of the Consumer Credit Act 1974: once you have paid 50% of the total amount payable, you can hand the car back and owe nothing further, subject to it being in reasonable condition.
Worked example: £20,000 car, £2,000 deposit, 8.9% APR, 48 months
Further reading
Understanding how APR is applied — and how to clear the agreement early — helps you judge the true cost of an HP deal.
How to calculate APR on a UK car loan →How to pay off car finance early →Frequently asked questions
What is Hire Purchase (HP)?
HP is a secured car finance agreement where you pay a deposit and make fixed monthly payments over a set term. The finance company owns the car until the final payment, at which point ownership transfers to you. There is no balloon payment.
How does HP differ from PCP?
HP payments are higher because you repay the full amount financed (not just depreciation). However, the total cost is often lower than PCP because there is no balloon payment accruing interest. You automatically own the car at the end.
Can I sell a car on HP?
Technically the car belongs to the finance company until the final payment. You cannot sell it without settling the finance first. Selling a car subject to outstanding HP without informing the buyer is a criminal offence under the Consumer Credit Act.
Is HP a good choice for older or used cars?
HP is popular for used cars because dealers can offer HP on any vehicle regardless of age or mileage. PCP requires a reliable residual value prediction, which is harder for older cars, so HP is often the default finance option for used vehicles.
How is a hire purchase monthly payment calculated?
The lender takes the amount financed (vehicle price minus your deposit) and applies the annuity formula using the APR and the number of months, producing a fixed monthly payment that clears the full balance by the end of the term. For an £18,000 balance at 8.9% APR over 48 months, that is roughly £446 a month. There is no balloon payment held back, so every instalment reduces the balance. This is an estimate; your actual payment depends on the lender’s APR and any fees.
Do I own the car with hire purchase?
Not until the final payment. Throughout an HP agreement the finance company is the legal owner and you are the registered keeper. Ownership transfers to you once the last instalment (and any option-to-purchase fee) is paid. Because the car is not yours during the term, you cannot legally sell it without settling the finance first — doing so without telling the buyer can amount to an offence.
Can I pay off hire purchase early?
Yes. You can request a settlement figure and clear the agreement at any point, and you are entitled to a statutory rebate of part of the future interest under the Consumer Credit (Early Settlement) Regulations 2004 — so settling early costs less than the sum of the remaining payments. Alternatively, once you have paid 50% of the total amount payable, you can use voluntary termination under the Consumer Credit Act 1974 to hand the car back and owe nothing further, subject to condition.
What is the difference between hire purchase and a personal loan?
A personal loan is unsecured: the money is yours, you buy the car outright, and you own it from day one. Hire purchase is secured against the car, so the finance company owns it until the final payment and can repossess more easily if you default. HP is easy to arrange at the dealership and available on almost any vehicle, but a personal loan gives you immediate ownership and the freedom to sell the car whenever you like.
These calculations are estimates based on 2026/27 HMRC and DVLA rates. Speak to a lender or qualified financial adviser for a personalised quote.