What is Hire Purchase?
Hire Purchase is a credit agreement where the buyer pays for an item in regular instalments while enjoying the use of it. During the repayment period, the item remains the property of the creditor, usually a finance company. Upon full repayment, the buyer becomes the owner.
Can I sell an item bought on Hire Purchase?
If the item is still within the repayment period, it is the property of the creditor and cannot be sold by the buyer. If the buyer wishes to sell the item, they should obtain the express permission of the creditor.
Remember that you will still be liable for any balance not cleared from the sale of the item.
What if I have a problem with an item bought on Hire Purchase?
If the goods included, or you chose to pay for, a warranty or guarantee, you have additional protection.
- Contact the retailer and tell them what the problem is.
- Give them an opportunity to put it right, if necessary, under the terms of the guarantee or warranty.
What if this does not solve my problem?
Contact the creditor explaining what is wrong and the steps you have taken to try to resolve your complaint. If you have a valid claim, they as the owner must put things right.
Remember, you have no rights if the problem is due to fair wear and tear or misuse. The age and price you paid for the goods is important when determining what is satisfactory quality.
Don’t assume that if the goods are faulty you can stop making payments. You need to follow these steps to try to resolve your complaint. Stopping the payment will put you in breach of contract.
What happens if I breach the contract?
If you do not keep up with your repayments, you will be in breach of contract and you may be sued for the outstanding balance. This may affect your credit rating, should you want more credit in the future.
If you are buying goods by Hire Purchase, the finance company have the right to repossess the goods since they legally own it until all the repayments are made.
What else do I need to think about?
Be aware of additional fees and charges that may result in the repayments being more than advertised. Avoid taking on more agreements than you can comfortably afford.
If your situation changes and you struggle to meet repayments, talk to the creditor.
Citizens Advice Jersey have specialist Debt Advisers who can assist with working out a budget and negotiating on your behalf.