HP Car Finance
For Bad Credit

What is Hire Purchase finance?

Hire Purchase (HP) finance is a car financing option that lets you spread the cost of a vehicle over fixed monthly instalments. With an HP agreement, you pay an initial deposit and then make monthly payments over an agreed term. At the end of the agreement, after paying the final purchase fee, you become the legal owner of the car.

For example, you might pay a £2,000 deposit upfront and then £250 per month for three years. This structure allows you to manage your budget while working towards full car ownership without needing a large lump sum at the start.

How does HP finance work?

Hire Purchase (HP) finance is a simple process that helps you spread the cost of a car over time while working towards ownership. Here’s how it works:

1. Pay an initial deposit

You start by paying an initial deposit, which is usually a percentage of the car’s total cost. A higher deposit reduces the amount borrowed and lowers your monthly repayments. For example, if you put down a £3,000 deposit on a £15,000 car, you’ll need to repay the remaining £12,000 over the agreed term.

2. Make monthly repayments

You’ll then make fixed monthly repayments that cover both the borrowed amount and the interest (the cost of credit). Repayment terms typically range from one to five years, allowing you to choose a timeframe that suits your budget. For instance, you might pay £250 per month for four years, with the total cost depending on the interest rate agreed with the finance company.

3. Ownership at the end of the contract

At the end of the contract, you’ll have the option to pay the Option to Purchase fee, a small amount that finalises your ownership of the car. For example, paying a £150 fee after completing your monthly repayments would make you the car’s legal owner. If you choose not to pay this fee, the finance company retains ownership of the vehicle.

Why Choose Carboom for HP Finance with Bad Credit?

We specialise in helping people with poor credit history secure affordable car finance. Here's what sets us apart:

• Real person reviews - Every application is reviewed by a member of our expert team, not just a computer algorithm
• Specialist bad credit lenders - We work with lenders who understand that a poor credit score doesn't define your future
• Soft search available - Check your eligibility without impacting your credit score
• No upfront fees - There's no charge for submitting an application
• Flexible payment plans - We work with you to create achievable monthly payments that fit your budget
• Full transparency - All costs are agreed upfront with no hidden fees or surprises
• Wide vehicle choice - Access to thousands of quality new and used cars

Can I get HP car finance with a bad credit?

Yes, HP car finance is an option for those with bad credit. As a secured loan, the lender owns the car until the final repayment, reducing their risk and improving your chances of approval. While a lower credit score may result in higher interest rates, making timely payments can help improve your credit over time. Many borrowers refinance halfway through their agreement to secure better terms, including lower interest rates. By managing repayments responsibly, HP finance can help you get the car you need while working towards a stronger credit profile.

Advantages of Hire Purchase

Hire Purchase (HP) can be an accessible car financing option for those with a poor credit score. Key benefits include:

• Flexible repayment terms: Spread the cost over a timeframe that suits your financial situation, with terms typically ranging from 12 to 60 months.
• Fixed interest rates: Monthly repayments stay consistent throughout the agreement, helping you manage your budget without surprises.
• Credit score improvement: Making regular, on-time payments shows lenders you’re reliable, which can gradually improve your credit score.
• Low upfront costs: Instead of paying the full price upfront, you only need to provide a deposit, making it easier to get approved.
• Path to ownership: Once you complete the repayments and pay the Option to Purchase fee, the car is yours, providing long-term value and stability.

Disadvantages of Hire Purchase

Hire Purchase (HP) can be a practical option for financing a car, but it’s important to understand the potential challenges, especially if you have a poor credit score. Key drawbacks include:

• Higher interest rates: With bad credit, you may face higher interest rates, increasing the total cost of the agreement.
• Monthly payment pressure: Regular payments can be a challenge if your finances are already stretched, so careful budgeting is essential.
• Car ownership delays: You won’t legally own the car until the final payment, limiting your ability to sell or modify it during the agreement.
• Credit risks from missed payments: Missing payments can worsen your credit score and lead to the car being repossessed by the lender, making it harder to secure finance in the future.
• Limited flexibility: Unlike some other finance options, HP doesn’t allow you to easily return the car before completing the term.