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Home > Maths I > Numbers and Money > Hire purchase

Maths I

Hire purchase

Calculating hire purchase price

Often, using H.P you pay a deposit first and the remainder by monthly instalments. To calculate the total H.P. price you have to add together the deposit and the total of all of the instalments.

Example

A new TV costs £690 cash. It is available on H.P. by paying a deposit of 15% followed by 12 instalments of £55.85.

Find the total H.P. price and the extra that you would pay (over the cash price) using H.P.

  • First we calculate the deposit:

    • Deposit = 15% of £690

    • = 15 \over 100 of 690

    • = 15 x 6.90

    • = £103.50

  • Now we need to calculate the total instalments:

    • Total instalments = £55.85 x 12

    • = £670.20

  • We can now find the total H.P. cost

    • H.P. cost = deposit + total instalments

    • = £103.50 + £670.20

    • = £773.70

  • Finally we work out the difference between the H.P price and the cash price

    • Extra paid = H.P. cost - cash price

    • = £773.70 - £690

    • = £83.70

Now try this question:

Question

A DVD player costs £240 cash. It is available on H.P. by paying a deposit of 20% followed by 12 instalments of £18.50. Find the extra paid by H.P.

Answer
  • First we calculate the deposit:

    • Deposit = 20% of £240

    • = 20 x 2.40

    • = £48.00

  • Now we need to calculate the total instalments:

    • Total instalments = £18.50 x 12

    • = £222.00

  • We can now find the total H.P. cost

    • H.P. cost = deposit + total instalments

    • = £48.00 + £222.00

    • = £270.00

  • Finally we work out the difference between the H.P price and the cash price

    • Extra paid = H.P. cost - cash price

    • = £270.00 - £240.00

    • = £30.00

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