Hire purchase has no balloon payment — the monthly payments cover the whole amount, and the car is yours after the final one.
Monthly payment £557. Total cost to own £29,732.
On HP, a £25,000 car with £3,000 down at 9.9% APR is about £557 a month for 48 months. You'd pay £29,732 in total to own it — £4,732 of that interest.
How it's made up
| Car price | £25,000.00 |
| Less deposit / part-exchange | −£3,000.00 |
| Amount financed | £22,000.00 |
| 48 monthly payments of £557 | £26,732.20 |
| Interest & charges | £4,732.20 |
| Total cost to own | £29,732.20 |
HP spreads the whole car price over the term, so monthly payments are higher than PCP but there’s no big final payment — the car is yours once the last instalment clears.
PCP vs HP on these figures
| Monthly | Total to own | |
|---|---|---|
| PCP | £386 | £31,541 |
| HP · you | £557 | £29,732 |
PCP keeps the monthly payment lower (you only finance the depreciation), but you don't own the car unless you pay the balloon. HP costs more each month with no balloon — the car is yours at the end. Total cost to own is usually similar; PCP gives flexibility, HP gives certainty. New to this? Read PCP vs HP explained. Considering a personal loan to buy the car outright instead? Compare the cost with the loan calculator.
Frequently asked questions
Do I own the car at the end of a hire purchase agreement?
Yes. Once you have made every monthly payment — plus a small “option to purchase” fee that most lenders charge at the end — ownership transfers to you. Until that final payment the finance company owns the car, which is why you can’t sell it during the agreement without settling the finance first.
Does hire purchase have a balloon payment?
No. Unlike PCP, HP spreads the whole amount you borrow across the monthly payments, so there is no large final balloon or GMFV to find at the end. That makes the monthly payment higher than PCP on the same car, but there are no surprises when the term finishes.
Is HP cheaper than PCP?
Monthly, no — HP payments are higher because they repay the whole car. But the total cost to own is often lower, because PCP defers a large slice into the balloon payment and charges interest on it throughout. If you plan to keep the car, HP usually wins; if you swap cars every few years, PCP’s lower monthlies may suit you. Toggle between PCP and HP above to compare on the same figures.
Can I end a hire purchase agreement early?
Yes, in two ways. You can settle early: ask the lender for a settlement figure, pay it, and the car is yours — often with a small early settlement charge. Or you can use voluntary termination and return the car instead. Check your agreement for exact fees before deciding.
What is voluntary termination on HP finance?
A legal right under the Consumer Credit Act: once you have paid at least half of the total amount payable (or you pay the difference to reach half), you can return the car and end the agreement. You must have taken reasonable care of the car, and you don’t get back what you’ve paid — but you owe nothing more. The calculator above shows roughly when you reach the halfway point.
What happens if I miss HP payments?
Contact your lender as early as possible — missed payments are recorded on your credit file and the agreement can end in default. Because the lender owns the car until the final payment, it can be repossessed; once you have paid a third of the total amount payable, the lender needs a court order to take it. Free help is available from MoneyHelper, StepChange and Citizens Advice.
Related calculators & guides
Sources & guidance
Last reviewed June 2026 against official rates · How we calculate →
An illustration based on the figures you enter, assuming a fixed APR and equal monthly payments. Real agreements may include an arrangement or option-to-purchase fee, mileage limits and excess-mileage/damage charges on PCP, and the rate you're offered depends on your circumstances. This is not a finance offer or financial advice.