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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

• = 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.

• 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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