HP Car finance eligibility & requirements (UK)

Your route to HP approval in the UK

Understanding HP finance starts with eligibility. Lenders assess age, residency, credit history, income, deposit and documentation. Get these right and you reduce delays, avoid declined applications and secure stronger rates.

Clear criteria, prepared documents and a realistic budget are your best route to approval.

Is this guide for you?

This guide suits UK consumers comparing HP with PCP or cash, including first-time buyers, returning motorists, self-employed professionals and retirees. It is especially useful if you want ownership at the end, dislike mileage limits, or you are building UK credit. Non-British nationals living in the UK will also find it relevant.

Key terms explained simply

• Hire Purchase - A car finance agreement where you pay a deposit, then fixed monthly payments. You own the car once the final payment and any option-to-purchase fee are paid.
• APR - The annual percentage rate that shows borrowing cost. HP APRs commonly range around 5% to 10% for stronger credit, higher with weaker profiles.
• Deposit - Upfront contribution, typically 10% or more of the car price. A larger deposit can lower monthly payments and sometimes reduce the rate.
• UK credit history - A track record with UK credit accounts and on-time payments. It influences approval and price.
• Affordability - Lenders check income and outgoings to ensure repayments fit within your budget.
• Option-to-purchase fee - A small final fee sometimes required to transfer ownership.
• Franchised vs independent dealers - Franchised dealers may have sharper rates or 0% on new cars. Independent dealers often carry higher APRs, especially on older vehicles.

Short standout line: HP gives guaranteed ownership and no mileage caps.

Choosing HP and where to buy

Hire Purchase is popular for drivers who want to keep the car without end-of-term variables. If you commute long distances or prefer long-term ownership, HP keeps things straightforward.

Where you source the car matters:

• Franchised dealerships - Often better manufacturer-linked offers, deposit contributions on new models, and sometimes 0% finance for the strongest profiles. Usually newer stock and warranties.
• Independent dealers - Greater variety of used cars and price points. Finance can be convenient but rates may be higher.
• Online brokers and lenders - Useful for pre-approvals and comparisons. Many offer digital journeys in 2025, allowing document uploads and quick decisions.

Compare total payable, not just the monthly figure. Look for representative APR, fees, and any dealer incentives that offset costs.

What it costs and why it varies

• Interest rate - Typically around 5% to 10% APR for good credit, higher for weaker credit profiles. Your credit score, car age, mileage and dealer type all influence pricing.
• Deposit - Expect at least 10%. A larger deposit can reduce interest paid and monthly cost, and may open lower APR bands.
• Fees - Check for documentation fees and the option-to-purchase fee at the end.
• Insurance and running costs - HP does not cover insurance, maintenance or road tax. Budget these alongside your monthly payment.

Impact and risks:

• Missed payments can harm your credit file and risk repossession. Do not overextend.
• Variable offers - Promotions at franchised dealers can be attractive but time-limited.
• Total cost - Longer terms reduce the monthly but increase total interest paid.

Can you qualify? Core checks in the UK

• Age - Minimum 18 to enter a finance agreement in the UK.
• Residency and address history - Lenders usually ask for UK residency and around three years of address history. Some accept less if income and stability are strong.
• Credit history - A UK credit footprint is essential. Strong credit usually means lower APRs. Weaker credit can still be approved, but expect higher costs or tighter limits.
• Income and employment - Proof of income is required. Employment is not mandatory. Retirees and self-employed applicants can qualify with reliable, evidenced income. Those not working may find approval harder.
• Deposit - Plan for at least 10% upfront. Bigger deposits can offset weaker credit.
• Non-British nationals - Eligible if you have UK credit history and meet affordability checks. Nationality is less important than creditworthiness and stability.

What to prepare - documents that speed approval

Have these to hand before applying. Digital uploads are standard in 2025.

Having documents ready reduces back-and-forth and shortens decision times.

The HP journey in simple steps

1. Check your credit file and set a realistic budget
2. Gather ID, address, income and bank statements
3. Get pre-approval online to compare real APRs
4. Choose a car and confirm deposit amount
5. Lender runs affordability and credit checks
6. Sign agreement digitally or at the dealership
7. Pay deposit and arrange insurance before collection
8. Make fixed monthly payments until ownership transfers

Strengths and trade-offs

Pros:

• Ownership guaranteed at the end
• No mileage limits or wear-and-tear charges
• Fixed monthly payments simplify budgeting
• Suitable for higher annual mileages

Cons:

• Monthly payments usually higher than PCP
• Early settlement may include interest and fees
• Older cars and weaker credit can raise APR
• Missed payments risk repossession and credit damage

Red flags and smart checks before you sign

• Verify the APR, fees and total amount payable
• Test affordability under stress - could you pay if rates rise elsewhere or income dips
• Confirm any optional final fee and settlement terms
• Check warranty, MOT, service history and insurance class
• Watch for add-ons you do not need - gap, paint protection and service plans should be compared independently

Short standout line: Never sign before reading the total amount payable.

Alternative ways to fund a car

• PCP - Lower monthly payments with a large final balloon and mileage limits. You can return, part-exchange or pay the balloon to own. Good for frequent upgrades.
• Personal loan - Unsecured, shop rates across banks and building societies. You own the car immediately.
• Leasing - Fixed term rental with mileage limits. No ownership.
• Cash - No interest or fees, but consider opportunity cost of savings.

Comparison snapshot:

Common questions answered

• What is the minimum age for HP in the UK? - 18. You must be at least 18 to enter a finance agreement.
• Do I need three years of address history? - Most lenders prefer around three years. Some accept less with strong income and stability.
• Can I get HP with poor credit? - Possibly, but expect higher APRs and a larger deposit request. Improving your credit can broaden your options.
• Do I need to be employed? - Not strictly. Self-employed and retirees can qualify with proof of reliable income.
• Are there mileage limits with HP? - No. HP does not impose mileage caps, unlike PCP.
• Can non-British nationals apply? - Yes, if you have a UK credit history and meet affordability checks.
• Is the process digital? - Increasingly yes. Many lenders offer online applications, document uploads and quick decisions.

What to do next

• Check your credit report and correct any errors
• Set a budget including insurance and running costs
• Gather ID, address and income documents
• Compare HP quotes from franchised dealers, independents and online lenders
• Consider increasing your deposit to reduce monthly costs

Apply when your documents are ready - it improves speed and outcomes.

Important information

This guide is for general information only and is not personal financial advice. Eligibility and rates vary by lender, vehicle and your circumstances. Always read the agreement and seek professional advice if unsure.