Hire-Purchase agreements
Such agreements involve a creditor hiring out goods to a consumer (the hirer, and retaining its title to the goods until all payments have been made, when the hirer can acquire title, usually by paying a fee (which can be considerable, as in car deals with purely interest payments monthly and a "balloon" payment (for the deemed value of the car) at the end.
Typically, a retailer, the creditor's agent, will supply the goods to the consumer, while transferring title to the creditor. The creditor will pay his agent for the transfer of title. The consumer can use the goods while continuing to make periodic payments to the creditor. On paying the final instalment, title passes from the creditor to the consumer.
Traditionally, hire-purchase agreements have been regulated in parallel
with conditional sale agreements, If there has
been a difference between them, it is purely that under hire-purchase, the
consumer is under no obligation to take title to the goods, whereas under
conditional sale, transfer of title is automatic.
And just to ensure that any difference between them is minimised, Section 9(3)
of the Consumer Credit Act 1974 states that hire-purchase shall be treated as
credit.
But there is one odd difference between them, brought about by the 2003 changes to the Sale of Goods legislation. While all the new provisions for redress apply to all conditional sale agreements, only the old rights apply under hire-purchase agreements.
This page was last updated on 01/05/08 (c) Bob Imrie