My answer only differs from the previous ones in my theory as to the EXACT origin of the OP's confusion, and in the baby steps I provide for elucidation.
A character takes up different numbers of bytes depending on the encoding used (see here). There are a few contexts these days when we use 2 bytes per character, for example when programming in Java (here's why). Thus 40 Java characters would equal 80 bytes = 640 bits, the OP's calculation, and 10 Java characters would indeed encapsulate the right amount of information for a SHA-1 hash.
Unlike the thousands of possible Java characters, however, there are only 16 different hex characters, namely 0, 1, 2, 3, 4, 5, 6, 7, 8, 9, A, B, C, D, E and F. But these are not the same as Java characters, and take up far less space than the encodings of the Java characters 0 to 9 and A to F. They are symbols signifying all the possible values represented by just 4 bits:
0 0000 4 0100 8 1000 C 1100
1 0001 5 0101 9 1001 D 1101
2 0010 6 0110 A 1010 E 1110
3 0011 7 0111 B 1011 F 1111
Thus each hex character is only half a byte, and 40 hex characters gives us 20 bytes = 160 bits - the length of a SHA-1 hash.