7 July 2021

Hire Purchase Agreements

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What is a hire purchase?

Hire purchase is a common method used to finance a new or used vehicle. The buyer usually pays a deposit and then the remainder of the money is taken out as a loan secured on the vehicle. This loan is usually paid over a period of 12 to 60 months (one to five years). The buyer continues to pay monthly instalments over the agreed period of time.

Who owns the vehicle?

The ownership of the vehicle belongs to the seller until the full loan is paid. This is because the loan is secured against the vehicle. Hire purchase agreements commonly attract a small interest percentage, which is usually detailed in the initial contract, so in theory, there should be no surprises.

So what can go wrong?


A very cliché statement, but it really is important to ensure you understand the terms of the loan. A lot of common problems arise as lenders act in haste, often neglecting the governing terms and conditions. Consumers, being unaware of their rights, tend to be at the mercy of such lenders.

What type of cases do we see?

Often, we see cases where a client disputes one or more of the following:

  • a faulty vehicle
  • vehicle not of satisfactory quality
  • excess mileage and damage charges
  • mis-sale or misrepresentation

What to do if I can’t afford repayments

Simply put, if you fail to meet your monthly payments, you can potentially lose your vehicle. Lenders do have a duty towards consumers and ought to exercise this through any proceedings.

If you find yourself in such a position, you can always get in touch with us, where we can challenge and assist you through the process.

What information do I need to provide you with?

To investigate such a matter, we will request a copy of the credit agreement and require details such as:

  • a chronological summary of what happened.
  • any invoices and/or inspection documents if applicable.
  • evidence such as call recordings and or letters between you and the party (or parties) involved.


The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Connaught Law and authors accept no responsibility for loss that may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Connaught Law. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Connaught Law.

About the Author

Saad Abbas Hussain heads the Financial Disputes and Banking department at Connaught's. He has accumulated extensive industry experience within dispute resolution, regulation, and financial services, having previously worked for the Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS).

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