Work out hire purchase total cost instantly with clear inputs, formula shown and shareable results.
Hire purchase charges flat interest on the original financed amount for the whole term, even though the balance falls each month. The equivalent reducing-balance rate — solved from the actual payment stream — is close to double the quoted flat rate.
Flat interest
Interest = financed × flat rate × years; Monthly = (financed + interest)/months
Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.
Flat interest ignores repayments. You keep paying interest on money you have already returned.
The financier, until the final instalment is paid, which is what distinguishes it from a loan.