Monthly payment £552. Total cost to own £29,519.
On HP, a £25,000 car with £3,000 down at 9.9% APR is about £552 a month for 48 months. You'd pay £29,519 in total to own it — £4,519 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 £552 | £26,518.58 |
| Interest & charges | £4,518.58 |
| Total cost to own | £29,518.58 |
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.
Your rights as you pay
| A third of the total price paid (£9,840): the lender needs a court order to take the car back | Month 13 |
| Half the total price paid (£14,759): you can end the agreement, return the car and owe nothing more | Month 22 |
The total price is everything you pay: the deposit and the monthly payments. These rights come from the Consumer Credit Act 1974 (sections 90, 99 and 100). You can end the agreement before the halfway point too, by paying the difference up to half; either way the car must have been looked after. Weighing HP against PCP? The car finance calculator puts both side by side on the same figures.
Worked example: HP with and without a final payment
A £25,000 car with £3,000 down, at 9.9% APR over 48 months.
| Figure | Standard HP | With a £7,500 final payment |
|---|---|---|
| Monthly payment | £552 | £423 |
| Final payment | — | £7,500 |
| Interest | £4,519 | £5,821 |
| Total cost to own | £29,519 | £30,821 |
| Lender needs a court order to repossess (a third paid) | Month 13 | Month 18 |
| You can hand the car back owing nothing more (half paid) | Month 22 | Month 30 |
The final payment cuts the monthly payment by £129 but adds £1,303 of interest, because £7,500 stays borrowed for all 48 months. It also moves both rights later, because the total price you measure against is higher and the monthly payments are smaller.
Frequently asked questions
Do I own the car at the end of a hire purchase agreement?
Yes. Once you have made every payment — plus a small “option to purchase” fee that most lenders charge at the end — ownership transfers to you. Until then the finance company owns the car, which is why you can’t sell it during the agreement without settling the finance first.
Can hire purchase have a balloon payment?
Some HP deals do: a larger final instalment that lowers the monthly payments. Unlike a PCP balloon, it isn’t optional — it is the last instalment of the agreement, so you can’t simply hand the car back instead of paying it. Standard HP has no final payment. Enter one above to see how it changes the monthly payment, the interest and when your rights begin.
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. The car finance calculator compares both 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: at any time before the final payment falls due, you can end the agreement by telling the lender and return the car. If you have paid at least half of the total price you owe nothing more; if not, you pay the difference up to half. You must have taken reasonable care of the car, and you don’t get back what you’ve paid. The calculator above shows the month you reach half.
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 price, the lender needs a court order to take it. Free help is available from MoneyHelper, StepChange and Citizens Advice.
Related calculators & guides
Sources & guidance
- Consumer Credit Act 1974, s.90 — a court order to repossess once a third is paid ↗
- Consumer Credit Act 1974, s.99 — the right to end a hire purchase agreement ↗
- Consumer Credit Act 1974, s.100 — paying up to half of the total price when you end it ↗
- Citizens Advice — Hire purchase and conditional sale ↗
- HMRC VAT manual VATSC10174 — balloon payments in hire purchase ↗
- MoneyHelper — Buying a car with hire purchase ↗
Consumer Credit Act thresholds and HP terms checked on 27 September 2026 · 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.