Hire purchase - making the right choice

The leaflet is designed to help consumers decide if credit by way of hire purchase (HP) is the right choice, how HP works and what to look out for.

It is packed full of helpful information about the differences between HP and Conditional Sale, other credit options, different types of insurance often offered with HP agreements and how to end contracts early. There is also a useful eight-point checklist to follow before entering into a deal.

HP is a common way of paying for major items such as cars but, like any credit deal, you need to think carefully before committing yourself, have all the relevant information and read the small print. For example, did you know when you use HP that:

You don't legally own the goods until you have paid back all the money you owe. This means you cannot modify or sell them without the lender's permission.

Your contract is with a finance company (not the retailer) who will own the goods until the final payment is made.

The finance company can take the goods back if you don't keep up the repayments.

You will be liable for any damage caused to the goods during the contract period.

The Consumer Credit Act 1974 regulates most credit agreements and is designed to ensure that people have a clear record of their agreements with traders and of their rights and obligations under those agreements.

If any of the rules are not followed an agreement will be improperly executed and may be unenforceable.

For further information about consumer credit, or to request a copy of the (free) leaflet, the number to phone is the City of York Trading Standards on 01904 552519.

For consumer advice about a particular problem you may have with credit or any other consumer query, phone Consumer Direct on 08454 040506.

Updated: 11:12 Thursday, September 29, 2005