Hire purchase agreements

It is important for consumers to understand their legal rights when they have entered into a hire purchase agreement, if you have a question for our expert consumer solicitors in relation to a hire purchase agreements please complete our online enquiry form or call 0203 816 9314, our specialist advisers offer fixed fee 30 minute appointments from £150.

What are hire purchase agreements?

Hire purchase agreements are a type of credit, most commonly used by people to purchase goods such as cars, or large household appliances. Under a hire purchase agreement, the creditor remains the legal owner of the goods until you have repaid the sums due under the agreement. At the end of the agreement, you as the debtor have the option purchase the goods or return them to the creditor.

Sometimes, the hire purchase agreements may be challengeable by virtue of the fact that they do not comply with the strict consumer credit legislation, rendering them unenforceable. However, what happens if you fall behind on your repayments, and the agreement complies with the consumer credit legislation?

When you fall behind on your repayments, a creditor will often try to repossess the goods from you, and normally asks you to consent to returning the goods to them. However, this will not end your liability under the agreement, as even when the goods have been repossessed and sold, the creditor will pursue you for any other monies outstanding on the agreement.

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The Consumer Credit Act 1974

Many consumers are not aware of the provisions of the Consumer Credit Act 1974 which must be included on their agreement, which provides that if you have paid more than a third of the total debt, then the creditor must get a Court Order in order to repossess the goods from you. If the creditor breaches this rule, and repossesses the goods against your wishes, the consequences are severe. In such circumstances the agreement will be terminated and the debtor will be released from all liability under the agreement and is entitled to recover all sums paid to the creditor under the agreement. In addition to this, the debtor can also claim compensation from the creditor for loss of use of the vehicle from the day upon which it was repossessed.

If however, you have paid less than a third of your debt, the creditor will only need a Court Order when they want to remove goods from your property. However your creditor will not need to obtain a Court Order if the goods are in a public place. For example, if you have a hire purchase agreement on your car, your creditor does not need a Court Order to remover it from the street.

When should I contact solicitors?

If you have a hire purchase agreement, and the creditor has repossessed the goods, you should contact Stephensons whose specialist consumer credit solicitors can assess your credit agreement and investigate whether your creditor has followed the rules when seeking to repossess the goods from you.

In the current climate, many people are losing their jobs and becoming unable to meet their obligations to repay their debts. In these situations, if there is no challenge to the credit agreement, and you have paid more than half of the total amount payable under the agreement then you may be able to terminate the agreement.

Terminating a hire purchase agreement

If you entered into the hire purchase agreement as a consumer, then at any time before exercising the option to purchase the goods (the final payment) you can give notice to the creditor that you wish to terminate the agreement and can return the goods to them. As long as you have paid half of the total amount owing under the agreement, and clear any arrears to the date upon which you terminate the agreement, you can return the goods to the creditor and end your liability under the agreement. It is important that consumers should be aware that when returning the goods they should be in a satisfactory condition for their age and use, otherwise the creditor may seek further monies from you to cover any losses caused, by damage other than normal wear and tear.

It is important to note that you do not need to pay any excess mileage charges a creditor requests in order to voluntarily terminate the agreement. If you think you have paid charges in respect of this in the last 6 years call us on 0203 816 9314 to speak to a member of our team to see if you can claim this money paid back.

If your creditor has already terminated the agreement then you will not be able to rely on this provision to return the goods early. It is therefore vitally important that you consider your options before it is too late. In situations like this you should contact a specialist solicitor to assess whether the agreement is enforceable. If there is no challenge to the agreement itself, then it may be more realistic for the debtor to terminate the agreement, before losing the right to do so.

Contact Stephensons

If you find yourself in a situation with regards a hire purchase agreement and you wish to discuss your options with an expert contact our specialist solicitors on 0203 816 9314 or complete our online enquiry form.

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