Hire Purchase & Car Finance Debt

Hire purchase is a form of financial service that allows a consumer to purchase an expensive good, usually a car or an expensive set of furniture such as kitchen units. HP agreements are written up and signed, and although they are in your possession, you do not own the goods in full until the hire purchase debt is paid off. The creditor, by law, still owns the goods.

Hire Purchase is a different type of debt in the eyes of the law. For instance, the debtor should not sell the goods until the balance of the debt is paid off. Furthermore, the creditor can ask to have the goods returned if regular hire purchase payments are not kept up. Under normal credit conditions, the creditor can only ask for the money to be repaid, as the debtor owns the goods.

Hire Purchase arrears

Falling behind on HP payments has various implications, depending on how far through the repayment process the debtor has got. The law states that those who have paid over a third of their total debt must only be approached through the County Courts. However, if the debtor has paid less than a third of their debt, the creditor will seek a court order to reclaim the goods. However, many creditors will be reasonable if you suggest a repayment plan, and the courts may also rule in favour of a debtor taking this approach. There are formal processes in place surrounding court orders, return orders, time orders, and county court claims and judgements.

Ending a Hire Purchase agreement

Consumers are able to end a Hire Purchase agreement when the last payment is made, known as the token amount. If you cannot meet the final payments, the creditor may seek the goods, arrears or reimbursement for any damage.