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Bad Credit Hire Purchase (HP) Car Finance

All the cars we source finance for at Red Potato are sold under a hire purchase agreement. Hire purchase is one of the simplest forms of car finance which allows you to pay for your car over time, rather than in one bulk payment.

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We could help you get car finance, even if you:

  • Have no deposit
  • Are in an IVA/DMP
  • Have a CCJ
  • Have previously been declared bankrupt

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What is hire purchase?

Hire Purchase – also known as ‘HP finance’ – is the process of paying the total amount of a car in monthly installments, with interest added, over an agreed time period. Whilst the cost of credit increases the total amount you would pay, it can be more affordable in the long term. This is because it allows you to spread the cost of getting a newer or bigger car than you otherwise would be able to afford if you bought one outright.

During your agreement your finance company will own the vehicle and you will essentially be “hiring” it from them. Once you have made all payments due under the agreement you will then have full ownership of the car.

Hire purchase with Red Potato

When applying for a hire purchase agreement through Red Potato, we understand that you may have a bad credit history, or have previously been refused car finance. We will still consider your application if you:

There is also no requirement to put down a deposit for a car. If you can afford to, you choose to put down as much or as little as you like. You should be aware however, that the less you initially put down, the more your monthly repayments will be. You will also pay more interest over the term of the agreement.

Depending on what you can afford, a finance agreement can be taken over 3–5 years. You can also choose to settle your agreement at any point in the contract if you can afford to pay this amount off early.


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Bad credit and hire purchase

If you’re looking to take out bad credit car finance, it’s likely you have a bad credit history. Compared to other options such as car leasing, a hire purchase agreement can be considered the most accessible option for people with bad credit.

Car leasing can be attractive as the monthly payments are often lower. Unlike a hire purchase agreement, however, you will never own the vehicle. On the other hand, hire purchase will allow you to eventually own the vehicle. Additionally, as long as you make repayments on time this can help to improve your credit score.

Car leasing, however, is preferable if you don’t mind not owning the vehicle and want to change your car regularly.

Hire purchase vs other car finance options

Under a hire purchase agreement, the lender will own the car until you have made all payments due under the agreement. The main implication with this is that the lender can reclaim the car if you fail to make your payments. As lenders consider this type of loan as lower risk, if you do have bad credit, you will often have a better chance at getting approval for hire purchase car finance than you will for an unsecured loan.

Lenders consider unsecured car finance options (where the car is not owned by the lender during the term of the loan), such as personal loans to be higher risk. Unsecured finance lenders are less likely to offer you a deal if you have a history of bad credit as they are unable to reclaim the car if you fall behind with your repayments. With a personal loan, however, you have the benefit of owning the vehicle from the outset, should you be approved.

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This website is operated by Premium Plan Limited. Red Potato is a trading name of Premium Plan Limited, which is registered in England with Company No 05977118. Registered office: Kempton House, Kempton Way, PO Box 9562, Grantham, Lincolnshire, NG31 0EA. Premium Plan Limited is authorised and regulated by the Financial Conduct Authority (FRN: 742272). The Red Potato name and logo are trademarks of Totemic Limited. Premium Plan Limited is a member of the Finance & Leasing Association (FLA).