Used car finance has become an increasingly popular way of drivers getting behind the wheel of a nearly-new vehicle. Used car hire purchase is just one type of used car finance – and one of the most popular.

This article will break down what used car hire purchase is, and outline the advantages of this kind of car finance agreement. Finance your next ‘new to you’ used car by reading on.

What is used car hire purchase?

Used car hire purchase is just one type of car finance available to you.

With used car hire purchase, you’ll split the cost of your nearly-new vehicle over a set period of time. You’ll pay back what you borrow against this car over this designated time period via a series of affordable monthly instalments, plus interest.

You don’t own the car until you’ve paid in full, but it’s yours at the agreement’s end.

What are the advantages of used car hire purchase?

1. Flexibility

Used car hire purchase is one of the most flexible forms of car finance.

With this type of agreement, repayment terms are typically between one to five years, depending on how much you (the borrower) can afford to pay back each month. Choose to pay higher monthly repayments for a shorter borrowing period, or reduce these instalments with a longer repayment term. Remember that you’ll pay more interest the longer the agreement.

Used car hire purchase therefore has flexibility with how much you pay for your monthly instalments. You can always pay a larger upfront deposit for lower monthly repayments.

Some used car hire purchase agreements also allow you to pay off the agreement early, reducing the overall long-term cost. You’ll need to check with your lender whether you’re eligible for this kind of early termination.

2. Low initial deposit

Typically, you don’t have to front a big deposit with used car hire purchase. In fact, you should only expect to pay around 10% of your used car’s price on the deposit.

That said, you can also choose to pay more if preferred, which will then lower your monthly repayments.

3. Cost effective

A new car may have that ‘never been driven’ appeal, but you’re likely facing a hefty price tag for that privilege – and not all drivers can front that cost. What’s more, as soon as you drive off the dealer’s forecourt, its value significantly depreciates.

By choosing used car finance like a hire purchase agreement, you’re able to fund an affordable, reliable vehicle that won’t experience this extreme depreciation in value. Plus, your vehicle is less likely to drop in value during your ownership, too, meaning it’s a more stable and cost-effective investment overall.

4. Accessibility

Some types of car finance can be inaccessible for those with poor credit ratings.

Used car hire purchase is one of the easiest types of car finance to get approval for, making it a more accessible option for individuals with bad credit profiles.

In fact, at My Car Credit, we pride ourselves on providing car finance for drivers with poor credit scores.

5. No balloon payment

Used car hire purchase is just one kind of used car finance agreement. Another popular type is used car personal contract purchase (PCP).

With a used car PCP agreement, you’ll be expected to make a final balloon payment at the agreement’s end (plus an option to purchase fee and possible admin fees) in order to own the car. This can be expensive, and not all drivers have the cash to pay it.

With used car hire purchase, you won’t face this final lump sum – the car is yours at the end of the agreement.

6. Better control of finances

Saving up for a big deposit or balloon payment can take its toll on your financial situation. With used car hire purchase, there’s a fixed payment schedule where you pay the same every month for the entirety of the term.

You’ll benefit from fixed interest rates and monthly repayments – and know exactly what you owe each month and when you owe it. This puts you in better control of your finances, enabling you to budget accordingly.

7. No usage restrictions

A used car PCP agreement involves usage restrictions. If you cause unusual amounts of wear and tear to the vehicle, or if you exceed its annual mileage limit, you can be penalised.

With used car hire purchase, you don’t face any usage restrictions. Plus, you’ll also own the vehicle at the end of the agreement.

Does used car hire purchase have disadvantages?

As with any loan, it’s sensible to consider whether used car hire purchase is the best option for you.

Although this type of used car finance agreement is more flexible than PCP or a leasing deal, the monthly payments are usually higher. Plus, your deposit and term length will impact these repayments – higher deposits and shorter loan terms make for lower monthly instalments.

Used car hire purchase can therefore be a more expensive option for short term agreements (for example, those under a year).

Remember that if you miss out or default on any of your payments, this will negatively impact your overall credit score. Missed payments typically remain on your credit profile for six years. This can in turn impact future loan eligibility. What’s more, the car may also be taken away from you if you continue to miss your repayments.

Additionally, you won’t own the car until you’ve fully paid it off. So, you won’t be able to sell it or modify it until the agreement is complete.

Find the right used car hire purchase for you

My Car Credit offers a range of different used car finance agreements.

Use our online calculator to get a no-obligation quote for used car hire purchase in mere minutes. Simply input the amount you want to borrow and your ideal repayment term, and we’ll give you an instant, online decision.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating


  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed


  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs


  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit


  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past


  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan

X monthly repayments of

Typical rate

Loan amount

Total payable




*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!