If you have ever entered into a hire purchase agreement, you may have wondered about the steps to end this contract. Ending a hire purchase agreement can be a bit complicated, but by following the correct procedures, it can be done smoothly. This article will guide you through the steps you need to take to end a hire purchase agreement successfully.
Firstly, it is important to understand what a hire purchase agreement is. A hire purchase agreement is a contract where a customer agrees to purchase goods through a hire purchase company by paying regular installments until the total cost of the goods is paid off. The customer can then take full ownership of the goods once the full payment has been made.
If you wish to end a hire purchase agreement, you have two options: voluntary termination or early settlement.
Voluntary termination: This is when you choose to end the agreement early, usually after paying off at least half of the total cost of the goods. Under the Consumer Credit Act of 1974, customers have the right to end a hire purchase agreement by returning the goods to the hire purchase company. The company will then calculate how much you need to pay, which will typically be half of the total cost of the goods minus any payments you have already made. You will not be required to make any further payments, but the hire purchase company may charge you for any damages to the goods.
Early settlement: This option involves paying off the full balance of the hire purchase agreement before the end of the contract term. The total amount you need to pay will be calculated by the hire purchase company and may include interest and fees. Early settlement is a good option if you can afford to pay off the contract early, as it can help you save money on interest charges.
When you have decided on which option to choose, you need to notify the hire purchase company in writing. The notice should include your name, address, and hire purchase agreement number, as well as your intention to end the contract. If you are ending the agreement early, you will also need to include details of your proposed settlement amount.
Once you have sent the notice, the hire purchase company will assess the situation and respond to your request. If you are ending the agreement through voluntary termination, they will arrange for the goods to be collected and calculate your final payment. If you are ending the agreement through early settlement, they will provide you with the total settlement amount, including any interest or fees.
In conclusion, ending a hire purchase agreement can be a bit complex, but by following the correct procedures, it can be done smoothly. Whether you choose voluntary termination or early settlement, it is important to notify the hire purchase company in writing and provide all the necessary details. With proper planning, you can end your hire purchase agreement and move on to other financial priorities.
