Also known as conditional sale a Hire Purchase HP agreement is a loan linked to a specific purchase such as a car a furniture suite etc. It is effectively a means of obtaining the use of an asset before payment is completed.

An HP contract involves an initial or down payment thereafter you hire the item you are buying for a fixed period during which time you pay for it in monthly instalments plus interest.

As the purchaser you wont own whatever youre buying on HP until you complete the payments - fail to do so and the company that has arranged the HP agreement will be within its rights to repossess the asset in question. Although legal title only passes at the end of the term for tax purposes the customer is regarded as the owner from the outset.