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Hire Purchase Total Cost Calculator

Work out hire purchase total cost instantly with clear inputs, formula shown and shareable results.

About Hire Purchase Total Cost Calculator

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.

Formula

Flat interest

Interest = financed × flat rate × years; Monthly = (financed + interest)/months

Worked example

With the default values below, Hire Purchase Total Cost Calculator returns Total Cost Including Deposit of $780,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Cash Priceminimum 0
600,000
Depositminimum 0
100,000
Flat Interest Rateaccepts 0–40 %
9 %
Term In Yearsaccepts 1–10
4

Results

Total Cost Including Deposit
$780,000.00
Monthly Payment
$14,166.67
Flat Interest Charged
$180,000.00
Equivalent Reducing-Balance Rate
15.986%

Step by step

  1. 1Values used
  2. 2Flat interest
  3. 3Total Cost Including Deposit= 780,000.00
  4. 4Monthly Payment= 14,166.67
  5. 5Flat Interest Charged= 180,000.00
  6. 6Equivalent Reducing-Balance Rate= 15.986

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • 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.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

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.

Frequently Asked Questions

Why is the effective rate so much higher?

Flat interest ignores repayments. You keep paying interest on money you have already returned.

Who owns the asset during hire purchase?

The financier, until the final instalment is paid, which is what distinguishes it from a loan.

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