Ways of Terminating Hire Purchase Agreement

A hire purchase agreement is a popular form of financing, allowing individuals to purchase goods or assets over a set period of time. However, there may be situations where an individual needs to terminate the hire purchase agreement prematurely.

Here are some ways to terminate a hire purchase agreement:

1. Voluntary Termination

Under the Consumer Credit Act 1974, an individual has the right to terminate a hire purchase agreement through voluntary termination. This means that the individual can return the goods to the finance company without further obligation, subject to certain conditions. For example, the individual must have paid off 50% of the total amount payable under the agreement, including any fees and interest.

2. Early Settlement

Another way to terminate a hire purchase agreement is through early settlement. This means that the individual pays off the outstanding balance of the agreement, including any fees and interest, before the end of the agreed term. Early settlement may be subject to a penalty, depending on the terms of the agreement.

3. Breach of Contract

If the finance company breaches the terms of the hire purchase agreement, the individual may have the right to terminate the agreement. For example, if the finance company fails to deliver the goods or if the goods are faulty, the individual may be able to terminate the agreement and seek compensation.

4. End of the Hire Purchase Term

Lastly, the hire purchase agreement will terminate automatically at the end of the agreed term, once all payments have been made. At this point, the individual will own the goods outright.

In conclusion, terminating a hire purchase agreement can be done in a number of ways, including through voluntary termination, early settlement, breach of contract, or at the end of the agreed term. It`s important to understand the terms and conditions of the agreement before entering into it, and to seek professional advice if needed.