Hire purchase and conditional sale agreements

A hire purchase or conditional sale agreement is a priority debt only if the goods are essential, for example a car to get to work.

How does this affect me?

The goods belong to the finance company until the debt has been cleared. In the meantime:
  • you cannot sell the goods without the finance company’s permission
  • if you have paid less than a third of the total purchase price, they can take back the goods without a court order
  • if you have paid more than a third of the total purchase price, they can ask the County Court for a possession order to take back the goods.

Can I stop the company getting a court order to take the goods?

If you can afford to pay the full monthly instalment and clear the arrears by the end of the loan period, the court may let you keep the goods on the condition that you keep to these payments.
Go to the court hearing and take a copy of your financial statement and any papers, including proof of income, the court might want to see.
If you cannot afford the above and if your loan is covered by the Consumer Credit Act 1974 (if it is, it should say so on your loan agreement), you may want to consider asking the court for a Time Order
If the judge agrees, this reduces the interest on the loan and/or lengthens its term so that you pay less each month. Applying for a Time Order is not straightforward, get advice as soon as possible before the hearing.
Get more information on hire purchase and conditional sale agreements, including what you can do if you have fallen behind with payments.
If you are sorting out debt problems, start at the beginning of this guidance, otherwise you may miss valuable information.

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