What happens at the end of your Hire Purchase finance agreement?

Once you reach the end of your Hire Purchase (HP) finance agreement, you have two choices for what to do next:

Keep reading to discover the ins and outs of each option at the end of your HP agreement.

1. Keep your car

For many, the most obvious choice once they’ve completed their HP finance agreement is to continue as the car’s legal owner. With proper servicing, your car should last for many years after its warranty runs out and, if you’ve finished making payments on your car, those extra years of motoring will really help make the most of your money.

You are free at any time to sell the car for cash, or to part exchange it for another vehicle. On the other hand, you might choose to hang on to it for many years or pass it on to a friend or family member. Again, you are the car’s legal owner, so you get to decide what happens to it.

Remember, however, that most cars will be out of their warranty period by the end of a typical HP finance agreement. This means you'll have to pay for any unexpected repairs alongside regular servicing, unless you decide to pay for an extended warranty – some of which only cover certain parts of the car.

Should you keep your HP financed car?

For the majority of drivers who pick HP finance, keeping your car at the end of the agreement is the most sensible option. You've paid all your monthly payments and all the interest owed, and can now enjoy the car for as long as you can keep it running with no more payments to make.

Since you own the car at the end of your HP finance, you have the flexibility to sell it at any point after the agreement ends. That could be when you decide to trade up to a newer or better car, or once it comes to the end of its working life.

The drawbacks of keeping a HP financed car are broadly the same as any car that you own outright. You are responsible for all maintenance costs, and most cars will no longer be covered by their factory warranty once the HP agreement finishes. You'll also lose money to depreciation as the car loses value over time.

Keeping your car might be the best choice if:

• You need a long-term car and don’t want ongoing finance payments
• You’re happy to keep on top of your vehicle’s maintenance schedule
• Changes in situation mean you cannot afford to start a new finance agreement

2. Sell your car

The other option at the end of your HP finance agreement is to sell your car. You can use the money on a new finance agreement on a different car, or have a lump sum for that holiday or new kitchen you keep promising yourself.

Your car loses value to depreciation over time. Selling your HP-financed car shortly after you complete the finance agreement means you'll probably get more money for it than if you choose to hang on to it for a few years.

Should you sell your HP financed car?

Many drivers choose to keep their HP-financed car for a few years after the agreement ends to make the most of the money they spent financing it. However, you might want to sell it sooner if you haven't enjoyed owning it or need a different bodystyle – if you've had a new addition to your family, for example.

Selling your HP-financed car sooner means you'll get more money for it rather than waiting longer and losing more value to depreciation.

Of course, the downside here is that you'll no longer have the car. You'll have to replace it with a different vehicle, possibly with another finance agreement, if you still need a set of wheels.

Selling your car might be the best choice if:

• You want to change your current car or need a different type of car
• You previously had more than one car in your household but no longer need the extra vehicle
• You want a cash lump sum to use on a different large purchase

Coming to the end of your PCP finance agreement?

If you’re on a PCP finance agreement instead of an HP one, then check out our handy guide to your options at the end of a PCP car finance agreement.