Glossary: Hire purchase agreement
A hire purchase or ‘conditional sale’ agreement is generally used for buying cars or furniture whereby the debt of the goods belongs to the organisation they were bought from (the creditor) until such a time as the debt is paid off. Only then do they belong to the purchaser. Not to be confused with an ordinary credit agreement. With an HP agreement you can’t sell the goods until the debt is repaid. If repayments are missed, creditors can demand the return of the goods or can repossess them. However, if more than a third of the total debt has been repaid, creditors have to pursue payment through the county courts first. With an ordinary credit agreement the buyer owns the goods (and can sell them) and a creditor can demand repayment of the debt but has no legal right to repossess the goods.