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At a glance: What to do if you’re finding it hard to pay for things bought on a hire purchase (HP).
Reading time: 2 mins
This summary covers England and Wales
For a version of this summary that covers Scotland, please click here.

What is hire purchase?

Hire purchase agreements are different from other credit agreements. You don’t own the goods until you’ve paid off the agreement. Conditional sale agreements work in the same way.  

Hire purchase is usually used to buy cars (often known as PCP agreements in the case of cars), and sometimes furniture and white goods. Some hire purchase agreements may give you extra rights, for example, you may be able to return the goods for free after a certain amount of time. Creditors may use other names for these kinds of hire purchase agreement such as ‘Personal Contract Purchase’ (PCP) or ‘rent to own’. 

With hire purchase, if you do not keep up with the payments the creditor may repossess the goods.  

If you cannot afford your hire purchase payments, there are things you can do.   

What happens if I cannot keep up with payments?

If you have paid a third or more of the total amount you owe, the goods become protected goods. The creditor must get a court order to take protected goods back, unless you agree they can take them.  

If you have already paid a third and the creditor takes the goods back without a court order or your permission, you are entitled to a refund of all the money you have paid under the agreement. 

If you want to work out if you have paid one third or more, remember to include any deposit or part exchange as well as the instalments you have paid already.

Making an offer to pay

If you can only afford part of the repayments, make an offer saying what you can pay.  Explain to your creditor how you have worked out your offer and that you are trying to pay as much as you can. If you need to make reduced payments now, but should be able to make bigger payments later, explain this when you make your payment offer. You will need to fill in a budget to work out what you can afford to pay. Use our Digital Advice Tool to do this.

Ending the agreement

Think about whether you need to keep the goods. If you can get by without them, it may save money to end the agreement. You have a right to do this at any time before the last payment is due, as long as the creditor has not already ended the agreement.  

Learn more about this topic

If you want to learn more about this topic, you can read our in-depth guide.

Read in-depth-guide

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