Your hire purchase agreement
Leave at 0 for a standard HP agreement. Lease purchase and "HP with a balloon" use a final payment.
Fees are added on top of interest at the rate you enter. A quote's APR usually already includes its fees, so either enter that APR with fees at £0, or enter the quote's interest rate together with its fees.
£0
per month
| Figure | Amount |
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Year by year
| Year | Paid | Interest | Capital | Balance at year end |
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Frequently asked questions
How is a hire purchase monthly payment calculated? â–¼
The amount borrowed (cash price minus deposit) is repaid in equal monthly payments that cover interest on the outstanding balance plus some capital. UKCalc converts the APR to a monthly rate as (1 + APR)^(1/12) − 1, because a UK APR is an annual effective rate. If the agreement has a final (balloon) payment, interest still runs on that part of the balance until it is paid.
What is the total charge for credit? â–¼
It is everything you pay on top of the cash price: the interest plus any fees, such as a documentation fee or an option-to-purchase fee. The total amount payable is the cash price plus the total charge for credit.
When do I own the car or goods on hire purchase? â–¼
Not until you have made every payment, including any option-to-purchase fee. Until then the finance company owns the goods and you are hiring them.
Can I end a hire purchase agreement early? â–¼
Yes. Under section 99 of the Consumer Credit Act 1974 you can end a regulated hire purchase agreement before the final payment is due by giving notice. Under section 100 you may then owe the amount by which half of the total price exceeds what you have already paid, unless the agreement asks for less. You can also settle early by paying off the balance. The calculator shows the half-way figure for your agreement.
What is a hire purchase with a balloon payment, or lease purchase? â–¼
It is hire purchase with a larger final payment, which lowers the monthly payments. Unlike PCP, you cannot hand the goods back instead of paying it: the final payment is owed. Enter it as the final payment to see the effect.
Is hire purchase or PCP better? â–¼
It depends on the deal and on whether you want to own the car. Use the car finance comparison calculator to put HP, PCP and leasing on the same inputs.