Hire Purchase (HP) is a simple way to pay for a car over time. You make regular payments, and once the last one is made, the car becomes yours. Until then, the lender owns the car, so some things need permission, some are allowed, and a few are not. If you’re still deciding, read how HP works or try our car finance calculator.
Who owns the car during HP and why it matters
You can use the car every day, but the lender still owns it until you’ve made the final payment. This means you may need permission for changes that affect the car’s value, safety, or identity. If the car is stolen or written off, the lender’s ownership also affects how insurance works. Keep your documents somewhere safe in case something unexpected happens.
Car finance with bad credit
Having poor or limited credit doesn’t mean you’ll be refused. Lenders also look at your income, how stable it is, and how you’ve handled money recently. Our guide on car finance with bad credit explains what to expect and what you’ll need to apply.
To give yourself the best chance:
- Set a budget that includes fuel, insurance, tyres, and servicing.
- Put down a small deposit if you can – it may reduce monthly payments.
- Have your documents ready – like your licence and job details.
- Avoid making lots of applications at once – it could hurt your chances.
Paying on time could help improve your credit over time. But missed payments may make borrowing harder in the future.
Modifications, accessories, and upgrades
If you want to make changes to the car – like fitting dark tints, remapping, or changing the exhaust – you usually need permission in writing. This is because changes can affect safety or value. If you don’t ask, the lender may want the car returned to its original state.
If you do go ahead:
- Use trusted installers
- Keep all receipts
- Tell your insurer so your policy stays valid
For the legal rules, see GOV.UK: vehicle modifications. For simple care tips, see our car care guides.
Taking your financed car abroad
Short trips abroad are usually allowed if your insurance covers it. But for longer trips (30 days or more), you’ll need written approval from the lender. Check insurance, breakdown cover, and the documents you’ll need for each country before you go. Read more on GOV.UK: driving abroad.
Personalised number plates
You can use a private number plate if the lender agrees. You’ll need to sort out the DVLA paperwork, pay the fees, and make sure the details are correct. If the car is written off or your agreement ends, make sure to keep or transfer the plate properly. See GOV.UK: personalised registrations for the full steps.
Insurance, accidents, and claims
If the car is damaged or written off, contact your insurer and lender straight away. In most cases, the payout will go to the lender to repair the car or help settle the remaining balance. Keep any claim numbers and repair details to hand to speed things up.
Servicing and everyday maintenance
You’re responsible for looking after the car while your agreement is running. Follow the service schedule – usually every 12 months or after a certain number of miles – and use approved parts. Keep records of any work done. This keeps the car reliable and protects its value. For a simple guide, see the AA’s advice on how often to service your car.
Mileage, usage, and wear and tear
Unlike PCP, most HP agreements don’t have mileage limits. The key thing is to make your payments on time and keep the car in good condition. Normal wear is fine, but fix any damage quickly to avoid extra costs.
Selling, part-exchanging, and early settlement
You can’t sell or trade in the car until you’ve paid it off, because you’re not the legal owner yet. If you want to change cars early, ask your lender for a settlement figure. Then you can decide whether to:
- Keep the car and finish the agreement
- Pay it off early
- Explore other options that may suit you better
More than one finance agreement
It’s possible to have more than one car finance agreement at the same time, but only if it’s affordable. Think about the cost of another car – fuel, tyres, servicing, insurance – and whether you really need it long term.
Transferring an agreement to someone else
HP agreements are set up for one person and can’t be passed on. If someone else wants to finance the same car, they’ll need to apply for a new agreement in their own name. If your situation changes, get in touch so we can help you look at your options.
Everyday dos and don’ts
- Do keep a copy of your agreement where you can find it easily.
- Do ask for permission before making changes or long trips abroad.
- Do service the car on time and keep all receipts.
- Do tell your insurer if your mileage or driving habits change.
- Don’t try to sell or transfer the car before you’ve paid it off.
- Don’t ignore warning lights or strange noises – get them checked.
- Don’t assume PCP rules apply – HP is different, especially with mileage.
