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IVA : What Is A Hire Purchase Agreement?
A Hire-purchase agreement is a mechanism for borrowing money in order to buy goods.
Hire-purchase agreements are secured loans that give the provider of the goods certain rights over the goods until the hire-purchase agreement is finished.
With a hire-purchase agreement the goods are hired for the term of the agreement at which point you can opt to purchase them. This means that until the end of the hire-purchase agreement you are not allowed to sell the goods as you are not the owner and you must abide by the terms of the hire-purchase agreement.
If you are unable to continue paying the hire-purchase agreement, the hire-purchase company can begin to seek the enforcement of the terms of the hire-purchase agreement i.e. repossession of the goods. Before they can do this they must serve a default notice.
If you are served with a default notice it is possible to apply to the court asking for extra time to pay. This order is called a "time order" and in the case of a hire-purchase agreement takes into account both future payments and any arrears
If the hire-purchase agreement was used to buy goods which are now kept at your premisses, i.e. a car in a garage or furniture in your house the goods cannot be removed without a court order. Hire-purchase goods become protected if you have paid in excess of a third of the total price. This also means that they cannot be repossessed without a court order.
If you are struggling to maintain payments to the hire-purchase agreement you can ask to re-negotiate the terms of the agreement. If re-negotiation is unsuccessful you can return the goods which will leave you with a shortfall still to pay.
If necessary this shortfall can be put into a bankruptcy or an Individual Voluntary Arrangement, which are both procedures for either writing off debt or coming to a new agreement to make reduced payments to your creditors.
If you are faced with any issues raised in this article and would like to discuss them further call 0800 088 7503 and speak to one of our specialist advisers or visit myIVA-Adviser and download one of our free guides designed to help find an answer to your financial problems.
