Hire Purchase Claims

Hire Purchase Claims2024-04-01T10:42:38+00:00

Understanding Hire Purchase (HP) Car Finance Claims in the UK:

A Guide to Your Options

Exploring the complex world of car finance can be a complex and difficult task, especially when it comes Hire Purchase (HP) car finance agreements. If you have recently found yourself questioning your Hire Purchase contract and wondering whether you are entitled to make a HP Car finance claim, you’re definitely not the only one. Many people across the UK are starting to think they might not have gotten the full picture from their car finance provider or dealer. They’re now looking into making claims to understand what their rights are and what they can do about it.

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What is a HP Claim?

A Hire Purchase Claim is may be something that you consider if you think that your Hire Purchase (HP) car finance agreement was mis-sold to you, or if you feel as you you’ve been unfairly treated or misled during the agreement of your car finance deal. Essentially, it’s about challenging issues such as undisclosed fees, inflated interest rates, or misrepresentation of the agreement’s terms – so that you can seek redress, get justice and try to win compensation for money that you may have paid unnecessarily.
It’s a way for consumers to stand up for their rights and ensure that they are getting a fair deal, as per the financial and consumer protection laws that we have here in the UK – which apply to car finance.

You can read our page on the reasons why people may make a Hire Purchase claim for more information.

Why Explore HP Claims?

When considering whether to make a Hire Purchase Claim, it’s important to understand why exploring into HP claims could be beneficial for you. If you’re saddled with a financial agreement that doesn’t seem quite right, a Hire Purchase claim could offer a pathway to address potential mis selling or mis representation when you were sold your HP Car finance deal.

Whether it’s to challenge hidden fees, question the interest rates, or correct misrepresented terms, exploring your options with HP claims can lead to significant financial relief and justice. In today’s turbulent economic landscape, ensuring you’re not overpaying for your car finance has never been more important. Looking into Hire Purchase Claims can not only put money back into your pocket but also provide the assurance that you’re being treated fairly in the marketplace, regardless of where you are in the UK.

If you feel you have been mis sold, misled or taken advantage of, it could have left you out of pocket and paying more than you should have. Aside from getting justice for a potential wrongdoing, few people can afford to pay more than they need to in a tough economic climate. Understanding what a PCP claim entails is the first step towards making an informed decision. It doesn’t matter whether your on the bustling streets of London or the rolling hills of Scotland, the implications of a mis-sold PCP can be far-reaching. It’s not just about ensuring you got a fair deal; it’s also about peace of mind and financial clarity.

How to Approach HP Claims

When thinking about making a Hire Purchase claim, the best first step is to research and do your due diligence on the grounds around successful HP claims to see whether you meet the eligibility criteria. If you’ve entered into a HP finance agreement and suspect there might have been unfair practices, taking steps towards a Hire Purchase claims could be your best course of action.

Start by reviewing your finance agreement thoroughly, identifying any discrepancies or terms that were not fully explained at the time of purchase. Then identify if you think that these factors warrant a HP claim, and start the process. It is advisable to act promptly, as there is generally a 6 year time limitation from when you were took out the HP finance for raising disputes (although there may be exceptions….read more here). There will also likely be a deadline that the FCA sets for those seeking to make a successful Hire Purchase claim.

An effective approach to Hire Purchase Claims can not only rectify your financial burden but also reinforce consumer rights protection, ensuring transparency and fairness in the market.

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Making a Hire Purchase Claim:

Your Options

If you’re considering making a Hire Purchase claim for mis sold car finance, there are a number of options available to you. Each route has its own pros and cons, and it would be advisable to research which is the best option for you and your circumstances before making a final decision.

Hire Purchase (HP) Claims and Your Finances

Whilst looking into the specifics of your Hire Purchase agreement, it would be advisable to look into how a claim could impact your finances.

By gaining a better understanding of your own personal circumstances, the Hire Purchase/Car Finance market and the Hire Purchase claims issue, you can make educated and informed decisions that provide the best possible outcomes for you, the consumer.

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How to Check If You Can Make a Hire Purchase Claim

The first and best place to look when deciding on how to make a Hire Purchase claim is your car finance contract, documentation and any related correspondence that you may have received. This could include documents such as your terms and conditions, interest rate or details of additional products that were sold to you when you make your purchase with Hire Purchase car finance.

When looking at your documentation, there are some red flags and warning signs to consider as to whether you were mis sold Hire Purchase car finance. These red flags could include the salesperson pressuring or rushing you into making a decision, or not being made aware of the commission that was being paid to the car dealership. It could also be something such as having a high interest rate on your Hire Purchase car finance product.

If you’d like to read more about what to look for in your documentation, you can do so in our blog.

The Hire Purchase Claims Process

How you undertake a Hire Purchase Claim will be dependent on the claims route that you decide to pursue. If you do decide to use a solicitor or claims management company to make your hire purchase claim, then the first step that you should take would be to find a reputable provider. Each solicitor or claims management company will likely have different processes and requirements for making a claim, but the first step would likely be to contact your Hire Purchase Car Finance provider. If you do decide that pursuing the HP claim yourself is the best option, then it reviewing your contract and documents would be a wise first step, before then reaching out to your car finance provider to make them aware of the issues that you have.

You can read more about the specific steps you may undertake for each of your options on our Hire Process claims process page.

How Much Compensation Could I get For My HP Claim?

Each Hire Purchase claim amount is dependent on many factors, such as your personal circumstances, the size of your HP finance agreement, the interest rate of your agreement and the overall length of your HP car finance. There have already been successful claims made against car finance providers, with some providers saying the average claim to be around £1,600 and maximum claim being more than £3,000. However, it must be noted that the actual amount you may receive if you are eligible and decide to claim is completely speculative at this stage and anyone making promises of an amount should be taken with a pinch of salt.

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The FCA on Hire Purchase Claims

The Financial Conduct Authority (FCA) plays a pivotal role in ensuring fairness and transparency within the UK’s financial services industry, including the oversight of hire purchase agreements for car finance. The FCA’s stance on Hire Purchase (HP) claims has evolve and escalated in recent months, particularly as it has sought to address issues surrounding the sale of financial products and services, after a significant increase in consumer complaints relating to car finance products.

In recent years, the FCA has been active in scrutinising the car finance market, identifying practices that could lead to consumer harm. For example, in 2018, the FCA outlined its concerns about discretionary commission models where brokers could set the interest rate for customers, leading to potential conflicts of interest and higher costs for consumers. This resulted in the FCA banning discretionary commission models, which took effect from January 2021.

On 11 January 2024, the FCA announced a comprehensive review of the car finance market with the aim of ensuring consumers who may have suffered losses due to poor practices and mis-selling are compensated. As part of this process, it has introduced temporary complaint-handling rules for certain car finance complaints, specifically where a discretionary commission arrangement was in place prior to 28 January 2021.

These temporary rules apply to complaints made between 17 November 2023 and 25 September 2024, or those where a final response was received from the business involved between 12 July 2023 and 20 November 2024. However, it is important to note that they do not apply to car finance agreements entered into on or after 28 January 2021 or to cars purchased under a hire agreement such as Personal Contract Hire.

Under these temporary rules, consumers have been given an extended period of 15 months from the date of the final response to refer their complaint to the FCA, as opposed to the six months that is usually given. The deadline for businesses to send a final response to certain car finance complaints has been extended by 37 weeks, giving them up to 45 weeks in total to address the issue.

The FCA has also addressed the handling of complaints about car finance commission. It has highlighted the requirement for brokers to adequately disclose commission arrangements to consumers. This aligns with the Consumer Credit Sourcebook (CONC) rules and principles, which require finance providers’ clarity and fairness in dealings with consumers.

In the event of a mis-sold Hire Purchase agreement, the FCA expects firms to handle complaints in accordance with its rules, providing fair and reasonable redress where it is appropriate. This may include adjusting the contract, refunding overpayments, or offering compensation for any financial loss or distress caused.

Consumers who believe they have been unfairly treated can file a complaint with the finance provider and, if unsatisfied with the outcome, can then escalate the matter to the Financial Ombudsman Service (FOS). The FOS plays a critical role by independently resolving disputes between consumers and businesses, ensuring that consumers receive a fair hearing and appropriate redress where justified.

In short, the FCA’s position on Hire Purchase claims aims to protect consumers from unfair and shady lending practices. It hopes to encourage greater transparency in the car finance market, and to ensure that any misconduct is addressed with suitable remedial action, including compensation for affected consumers.

Mis-Sold Hire Purchase Claims

Before you progress with your car finance claim, it is important to understand the reasons why you may have been mis sold Hire Purchase car finance to assess your eligibility for a claim. The investigation by the FCA has highlighted several ways in which it deems there to be potential misconduct with HP car finance contracts. Whether it is salespeople not disclosing key information (such as commissions!) or consumers being pressured into taking financial agreements which were not suitable for their means and circumstances.

Take a moment to think about whether you were told about the commission your car dealership was receiving for your Hire Purchase agreement, or the amount in which they were to receive?

Mis-sold Hire Purchase car finance agreements represent a serious issue with the UK’s consumer finance landscape; where unsuspecting consumers enter into contracts without having been fully informed about the terms, or having been subjected to unfair sales practices that see them worse off.

In cases of financial mis-selling, customers often find themselves burdened with excessive and sometimes unaffordable financial obligations that do not align with their original understanding or expectations of the deal they were undertaking. The Financial Conduct Authority (FCA) demands clear and fair disclosure of all financial products, including HP car finance agreements, to ensure that all charges, terms, and potential impacts on credit are thoroughly explained to consumers so that they can make an educated and informed decision before undertaking the agreement.

Consumers who believe their HP agreement was mis-sold have the right to seek redress and justice; which may involve filing a complaint with the finance provider or, if necessary, escalating the matter to the Financial Ombudsman Service for an independent resolution. Successfully proven claims can lead to adjustments in the contract’s terms, refunds on overpayments, or compensation for any unfair financial disadvantage experienced as a result of the mis-selling.

Who are Hire Purchase Claims Being Made Against?

Your Hire Purchase claim would typically be made against the car dealership who act as credit brokers, or the lenders who provide the hire purchase finance agreement. You as the consumer may make a complaint if you feel that your HP finance agreement was arranged unfairly or if the commission that was to be paid to the broker by the lender wasn’t properly disclosed. The issue here relies on the hidden and undisclosed incentive for the dealership to push you in a specific direction towards Hire Purchase finance, when in fact, it may not have been the best option for you – a clear conflict of interests that should be disclosed in order for you to make an educated and informed decision.

The agreement consumers undertake and the information in which they are given, can significantly impact the interest that they pay or their decision of which course of action is the best for their own personal circumstances. Sometimes, it also means that consumers are not fully aware of the key facts around their HP agreement.

In some cases, the finance provider themselves may be liable for claims regarding what was said by the credit broker before the finance agreement was undertaken. It could also be the case that consumers are able to make claims against the credit broker themselves, especially so if the customer feels that they were lied to or misled about key facts, features and information relating to the car or hire purchase agreement.

It is usually the Financial Ombudsman Service who deals with disputes relating to car finance agreements, such as Hire Purchase, when they haven’t been resolved between the consumer and the financial business. They will usually take a look the circumstances around the case, what the customer was told, what has happened since the consumer made a complaint and then decide whether the complaint is valid. If there is widespread misconduct identified, they may impose measures to ensure affected consumers receive fair compensation and redress. It may also mean that in some cases, there would be a case against the manufacturer themselves.

Who your claim should be made against will be dependent on the circumstances around the selling of your agreement and the reasons as to why you feel you have a case. If you use a solicitor or claims management company, they will be able to advise you professionally or handle this aspect of your Hire Purchase claim for you.

Hire Purchase Claims Timeline

The Difference between Hire Purchase (HP) & Personal Contract Purchase (PCP)

In the UK, when it comes to financing a car, two popular options are Hire Purchase (HP) and Personal Contract Purchase (PCP). Both have their unique features, benefits and disadvantages, and understanding the difference between them is crucial for making an informed decision that aligns with your financial situation and vehicle ownership goals.

Starting with Hire Purchase, it’s usually a straightforward finance agreement that is designed to spread the cost of a vehicle over a set period. When you choose HP, you pay an initial deposit followed by monthly payments. The monthly payments are determined by the total cost of the car minus your deposit and any interest charged. Throughout the repayment period, you are essentially ‘hiring’ the vehicle, and only once the final payment is made do you become the outright owner of the car. HP agreements are a form of secured loan – the security being the car itself – so if you fail to keep up with repayments, there’s a risk of the car being repossessed.

One of the key advantages of an HP agreement is its simplicity. You have a clear schedule of payments, and at the end of the term, there are no surprises – the car is yours. This can make it easier to budget for, as you know exactly when and how much you will pay from the outset. Additionally, because the car serves as collateral, interest rates can be lower compared to an unsecured loan.

On the other hand, Personal Contract Purchase offers more flexibility but with a slightly more complex structure. With PCP, you also pay an initial deposit and fixed monthly payments, but these payments are generally lower compared to HP. This is because you are not paying off the full value of the car. Instead, you are paying off the depreciation of the vehicle over the term of the agreement.

A distinctive feature of PCP is the ‘balloon payment’ at the end of the contract, a pre-agreed guaranteed future value (GFV) that represents what the car is worth at the end of the term. When the term ends, you have three choices: pay the balloon payment to own the car, hand the vehicle back with nothing more to pay (assuming it’s in good condition and within the agreed mileage), or part-exchange it for a new vehicle, using any equity above the GFV towards your next car.

The flexibility of PCP can be appealing, especially if you like to change cars regularly. It also allows you to drive a higher-value car than you might be able to afford outright. However, it’s important to be aware of the terms, such as mileage limits and potential charges for excessive wear and tear.

In summary, HP is a straightforward way to spread the cost of buying a car and eventually own it outright, whereas PCP offers lower monthly payments and flexibility at the end of the agreement but involves a balloon payment if you wish to keep the car. Both have their merits, and your choice will ultimately depend on your financial circumstances, your preferences for car ownership versus change, and how much flexibility you want in your payment structure.

Hire Purchase Claims Key Points

  • Misrepresentation of Terms: Customers may feel that they were misled or lied to regarding the Hire Purchase agreement’s terms and conditions.

  • Misrepresentation of Information: If crucial information was misrepresented at the point of sale or important details were omitted, consumers might have grounds for a claim. For instance, if the interest rates, fees, or the total amount payable were not clearly explained, or if the consumer was led to believe they would own the vehicle at the end of the agreement without any further payment when this was not the case.

  • Unfair Contract Terms: Consumers are protected against unfair terms in a contract by the Consumer Rights Act 2015. If the terms of a hire purchase agreement are found to be unfair or one-sided, this could be a reason for a claim.

  • Affordability Checks: Claims might involve instances where hire purchase finance agreements were approved without proper assessment of the customer’s ability to afford the repayments.

  • Commission Disclosure: Concerns over whether brokers’ commissions were adequately disclosed, as these could impact the interest rate and overall cost of the finance.

  • Full Explanation and Advice: Hire Purchase claims may also relate to the lack of full explanation and advice given to customers about the key features of HP and the pre-contract information required.

  • Breach of Regulatory Requirements: Hire purchase providers must comply with various regulations, including those set out by the FCA. A breach of these rules, such as not properly assessing a customer’s creditworthiness, could give rise to a claim.

  • Unfair Relationship: The Consumer Credit Act 1974 (as amended) introduced the concept of an ‘unfair relationship’ between creditors and debtors. If a relationship is deemed unfair, perhaps due to the creditor’s failure to disclose commissions or because of excessive charges, a consumer may have the right to bring a claim.

  • Potential Conflicts of Interest: The widespread use of commission models that link broker commissions to the customer interest rate can lead to conflicts of interest and prompt brokers to charge higher rates.

  • Quality and Fitness for Purpose: Under the Sale of Goods Act 1979 and subsequent amendments, there is an implied condition that goods supplied under a hire purchase agreement must be of satisfactory quality and fit for any particular purpose made known to the seller at the time of agreement. If the goods fall short of these expectations, the consumer may have a valid claim.

  • Undisclosed Charges or Encumbrances: If the goods are subject to charges or encumbrances which were not disclosed to the consumer prior to the agreement, or if the consumer’s right to enjoy quiet possession is disturbed by an undisclosed third party’s claim, this could be grounds for a claim.

  • Incorrect Usage of Default Notices: The Consumer Credit Act stipulates the use of default notices before taking action against a consumer for recovery of goods under a hire purchase agreement. If these notices are not used correctly, the consumer might have a claim.

  • Insolvency Protection: The law provides certain protections for consumers in the event of insolvency related to the hire purchase provider. If these rules are not followed, a consumer may be able to claim.

How Do We Know Hire Purchase Car Finance Mis Selling Has Been Taking Place?

The issue of mis-selling in hire purchase car finance has attracted increased scrutiny from consumer watchdogs and regulatory bodies such as the Financial Conduct Authority (FCA), with them taking a proactive stance to identify and address any malpractices within the industry.

As a result in a significant rise in complaints relating to Hire Purchase and PCP car finance agreements, the FCA has conducted multiple reviews and investigations over recent years. The findings from these reviews have been published on the FCA’s website and in several documents, offering valuable insights into industry practices and highlighting potential malpractice that could disadvantage the consumer. Specifically, the reports highlighted concerns about the lack of transparency around commission structures and potential conflicts of interest that might lead to customers being mis-sold financial products such as HP car finance. The reports and reviews from The FCA provide potential evidence of sales practices that do not always have the consumers’ best interests at heart, and in fact could be major conflicts of interests for those selling these agreements (such as undisclosed commissions). For example, a significant finding from their report was that consumers often received insufficient information about commission arrangements, which is a clear indication of potential mis-selling. The FCA’s report revealed that only a minority of retailers provided essential disclosure early enough in the process to alert customers to potential conflicts of interest, with figures showing as few as 1 out of 37 franchised retailers and 4 out of 60 independent retailers making appropriate disclosures.

Also, the report showed that many consumers were potentially not adequately made aware of the full terms to negotiate their HP car finance agreement. The FCA’s findings were limited due to a small sample size, yet the issues raised through mystery shopping exercises suggested that mis-selling practices might be more widespread across the market.

Another key indicator of malpractice & mis-selling comes from the volume and nature of customer complaints received and processed by firms, and then subsequently reported to the FCA. Enhanced reporting requirements mean that firms must disclose data on complaints, which the FCA then publishes. Trends in these reports can point to systemic issues within the industry. Additionally, a spike in complaints related to hire purchase agreements, particularly around the point of sale and the suitability of the financial product for the consumer, signals potential mis-selling and major issue for those affected. The announcement in January 2024 by the FCA regarding the handling and management of car finance claims was a direct result of an investigation that was sparked by a significant rise in complaints for products such as HP and PCP.

The report also noted that credit broking presented a major source of profit for motor retailers and dealerships. This potential conflict of interest just highlights the necessity for full transparency and integrity in the sales process in order to protect consumers and their rights. The dealerships profits should not come at the expense of consumer rights and their ability to make educated and informed consent when undertaking a financial agreement that could have significant implications on their lives, finances and wellbeing. The FCA investigation, announcement and work shows a proactive and caring approach towards identifying potential wrongdoing and protection of consumers – mitigating the risks and impact of hire purchase finance mis-selling.

Wherever the FCA finds evidence of non-compliance in relation to financial products such as hire purchase agreements, it has the authority to take action, which can include imposing fines, restricting a firm’s activities, or compensating affected consumers. Notices of these actions are often made publicly available through the FCA’s website, offering a transparent view of the industry’s compliance landscape.

Those consumers who feel they have been negatively affected by Hire Purchase car finance mis-selling may have grounds to pursue a claim. This is especially the case if they were not fully informed, or misinformed, about commission structures, possible conflicts of interest, or if they were not fully informed in relation to the terms and conditions of their HP finance agreement or the implications it could have.

Potential claimants should review their HP finance agreements and related documentation, and seek appropriate advice from a reputable and regulated professional if they suspect mis-selling. This keen interest and increased scrutiny by the FCA on the car finance market represents a clear positive step in consumer protection and regulatory oversight, and should provide motivation for anyone with concerns about their Hire Purchase agreement to consider their options relating to making a hire purchase claim.

  • The FCA’s mystery shopping exercise included a small, targeted sample size biased towards independent retailers offering PCP or other hire-purchase (HP) agreements.

  • This examination raised concerns that the issues identified might be more widespread in the car finance market.

  • Only 28% of brokers in the sample provided a full explanation of the total amount payable under the finance agreement to customers.

  • Only 11 of the 122 retailers checked told their customers that the dealership would receive a commission for arranging the deal

  • The used car finance market saw a significant increase, with 1,530,572 cars financed in 2022, an 8% increase from 1,361,878 in 2021.

  • Credit broking is a significant profit centre for motor retailers, suggesting a potential for conflicts of interest that may not always be adequately disclosed to consumers.

  • In 2022, more than 2.2 million customers took out car finance agreements, which was about a 3% increase from the previous year. Despite fewer new and used car sales, the total amount borrowed saw a 9% increase, with the average finance amount reaching new records for both new and used cars.

  • The amount borrowed for car finance hit a new record in 2022, with the total car finance borrowing for the year reaching almost £41 billion, an increase of £4 billion compared to the previous year. Such an uptrend suggests a growing reliance on finance options for car purchases in the UK.

Mis Sold Hire Purchase Claims Case Studies

The Financial Ombudsman provides several case studies of those who have made claims regarding car finance. In this section, we take a look at some of these case studies.

Car Finance Claims Case Studies
Car Finance Claims

UK Hire Purchase Finance Companies

Get familiar with the UK car finance companies landscape through our comprehensive directory, and keep up to date with the latest claims against specific car finance providers in the UK.

We cover a range of providers, giving you a snapshot of the market and the latest news in relation to car finance claims.

Hire Purchase Claims Information

This site aims to provide you with up to date information, education and tools so that you can gain a better picture of the car finance and hire purchase claims landscape. By providing you with knowledge and education of this complex area, you are able to assess whether a HP claim is the best route for you, and if so, the options available to you.

Our goal is to provide a central hub of HP and PCP claims knowledge and news, to keep you up to speed on your rights and options should you have a legitimate car finance claim.

Why are people making Hire Purchase claims?

It may feel like you’re seeing and hearing a lot about car finance claims, such as HP claims, all of a sudden.

This is largely due to an announcement made by the Financial Conduct Authority in January of 2024, where it announced it was further investigating car finance companies and dealerships. This is as a direct result of an increase in complaints against these providers, as well as an initial investigation into selling practices; including mystery shopper exercises. The announcement claims that companies may be falsely rejecting complaints and therefore consumers may not be getting the redress they deserve. This announcement has opened the door for potential claims by consumers, and in turn, those who act on their behalf such as solicitors and claims management companies.

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What are your options to make a Hire Purchase claim?

If you are in fact eligible to make a Hire Purchase claim, you have several options ahead of your. You could choose to engage the services of a registered solicitor, or an FCA registered claims management company. You could also look to personally handle the claim yourself should you feel comfortable doing so. It is crucially important that you consider the advantages and disadvantages of each potential route, based on your personal circumstances and requirements, before you make a decision. Do not feel pressured or coerced into any course of action that is not in your best interests.

Types of Car Finance Affected

There are a number of consumer credit agreements which may be eligible for a car finance claim. The primary types of finance implicated by recent developments and the investigation by the FCA are Hire Purchase (HP) and Personal Contract Purchase (PCP). Each of these have their own structures, commitments and features.

Hire Purchase is usually a straightforward affair, with the consumer repaying over time and eventually owning the vehicle in question. PCP is somewhat more complicated..whilst it generally offers lower monthly payments, it has a significant final (balloon) payment at the end of the agreement term. It is of vital importance for consumers to proactively look into the terms and specifics of finance agreements, and consider the impact that they may have on their finances and wider life.

Missteps in sales processes, misleading or lying practices or lack of transparency could all lead to potential claims for those with HP or PCP car finance agreements.

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How do I know if I have Hire Purchase car finance?

If you are unsure of whether you have Hire Purchase of another type of car finance, there are some distinctive features to look for in your paperwork that may provide clarity.

Hire purchase (HP) finance is a popular method for purchasing vehicles in the UK, with a set of features that distinguish it from other forms of car finance. Here are some of the distinctive features of hire purchase finance:

  • Ownership at the End of the Term: With hire purchase, the customer has the option to own the vehicle outright after all the payments have been made. This typically includes a final payment, sometimes referred to as the option to purchase fee, which transfers ownership from the finance company to the customer.

  • Fixed Interest Rates: Hire purchase agreements usually come with fixed interest rates, which means the monthly payments remain the same throughout the term of the agreement. This allows for easy budgeting, as the customer knows exactly what they will be paying each month.

  • Deposit and Repayment Structure: HP agreements often require an initial deposit, followed by fixed monthly payments. The amount of the deposit and the payment structure can vary but are agreed upon at the start of the contract.

  • Secured Loan: The loan under HP is secured against the vehicle being purchased. This means that if the customer fails to keep up with repayments, the finance company has the right to repossess the vehicle.

  • Regulated Agreements: Hire purchase agreements are regulated by the Consumer Credit Act 1974 and other laws such as the Hire-Purchase Act (Northern Ireland) 1966. These regulations offer protections to consumers, such as the right to voluntary termination and protections against unfair practices.

  • Quality and Fitness for Purpose: Under HP agreements, there is an implied condition that the vehicle will be of satisfactory quality, fit for purpose, and free from defects at the time of delivery, in line with the Sale of Goods Act 1979.

  • Right to Return: Although the expectation in an HP car finance agreement is that the consumer will purchase the goods outright at the end of the term, most modern agreements do contain provisions that allow for the return of the vehicle under certain conditions.

  • Consumer Protections: Under Section 75 of the Consumer Credit Act 1974, consumers have certain protections when they enter into a hire purchase agreement, such as the ability to make claims against the creditor for misrepresentation or breaches of contract

  • Bankruptcy Considerations: The goods under a hire purchase agreement are not considered the property of the bankrupt individual until the hire purchase agreement is terminated and all payments have been made.

  • Transparency and Choice: Regulatory guidance emphasises the need for transparency and choice in the car finance market. Customers should be informed about different finance products and how they work, to enable them to make an informed decision that suits their intentions, such as the desire to own the vehicle outright at the end of the agreement.

Hire Purchase Statistics

Car Finance Claims FAQ

Hire Purchase Claims FAQs

Here are some Frequently Asked Questions that those making a PCP Claim may have:

Hire Purchase (HP) is a financing option where you pay a deposit and then make regular monthly payments to pay off the remaining balance for your car. Ownership of the car is transferred to you once all payments, including the option to purchase fee, have been made.

With HP, you’re paying towards owning the car outright at the end of the agreement, unlike a Personal Contract Purchase (PCP) where you have the option to return the car. HP agreements usually have fixed interest rates and do not include mileage restrictions like some PCP agreements do.

  • If you acquired a vehicle on finance prior to the 28th of January, 2021. It was on this date when new regulations came into effect, prohibiting the kind of commission structure that was previously in place.
  • The finance option you chose was a Personal Contract Purchase (PCP), which is a prevalent form of vehicle finance. It functions similarly to a loan to assist you in obtaining a car or you may have opted for a Hire Purchase (HP) agreement, whereby you gradually cover the cost of the car through regular monthly payments.
  • The financial arrangement between your lender and the car dealership, which served as a credit broker, involved what is termed a ‘discretionary commission agreement’. Under this arrangement, the commission earned by the broker escalated with the increase in the interest rate that was charged to you.

Unfortunately it is unlikely you will be able to make a claim in these circumstances.

Many claims will target banks or financial institutions that have agreements with car manufacturers. However, you may be able to lodge a claim against car manufacturer brands.

Typically, you must complain to your provider within six years of the issue arising, or within three years of you becoming aware of the problem.

Yes, you may be able to claim for mis sold HP on used cars, provided you entered into a HP finance agreement to make the purchase and you can provide that you were mis sold the agreement.

At the end of an HP agreement, you will have the option to pay an ‘option to purchase’ fee to own the car outright. Once this payment is made, ownership of the vehicle is transferred to you.

Yes, you often have the right to settle your HP agreement early. You can request a settlement figure from your finance provider, and after paying this amount, you will own the car outright.

If you’re struggling to make payments, it’s important to speak to your finance provider as soon as possible. If you fail to make payments, the finance company may have the right to repossess the vehicle.

Yes, HP agreements typically require a deposit at the outset. The amount will vary depending on the finance provider and the total value of the car.

No, HP agreements do not usually come with mileage restrictions. This is a key difference from other finance options like PCP where mileage limits often apply.

Under an HP agreement, you may have the right to voluntary termination if you’ve paid half the total amount payable. However, the vehicle must be in good condition, and you won’t get your deposit back.

HP agreements are regulated, which means you are protected by the Consumer Credit Act 1974 and the Consumer Rights Act 2015. These provide several protections, including the right to voluntary termination and quality guarantees.

The option to purchase fee is a nominal amount that you will need to pay at the end of your HP agreement if you decide to own the vehicle. It’s typically a small sum compared to your monthly payments, and it covers the administrative cost of transferring ownership to you.

Accurate as of 23/1/24

Latest Hire Purchase Claims News

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