Hire Purchase is an agreement between you and a lender where you cannot afford the full price of an item, so you pay up for it every month in equal amounts (over an agreed period) until you have paid off the full price of the goods and the agreement is paid off. Up until then the goods belong to the creditor or lending company but once you make your final payment they belong to you. You cannot sell the goods during your HP agreement as they aren’t yours to own. People usually take out Hire Purchase arrangements for items such as Cars, Furniture, and high priced Electronics etc.
From the moment you start a Hire Purchase agreement it is considered as a debt. If you fail to make agreed payments or are falling behind the lender can ask for the goods to be returned which you may be obliged to do depending on how far into your agreement you are. If you have paid more than a third of the debt and the creditor wants the goods to be returned they must get a court order. They cannot just turn up at your house and repossess the goods. If they do this and a third or more of the agreement has been paid, you are entitled to a refund of all the money you have paid under the agreement.
If you haven’t paid more than a third of the debt you can ask the creditor to agree new terms (if you can afford the monthly installment plus something toward the arrears, creditors are often willing to help) or apply to the court for a 'Time Order'. This enables you to maybe alter the monthly payment, the length of the loan, or the interest rate.
If you are missing regular payments the creditor may try and take you to court if the agreement cannot be resolved. The courts are there to help both you and the creditor. If you can pay back the debt in reasonable installments, the court may let you keep your goods and set this in place.
If you are experiencing any difficulty with Hire Purchase Debt please get in touch with Debt Advice London today. Our expert advisors will be able to advise you on your debt and point you in the right direction to resolving your debt problems.
