Summary

This module covered Hire Purchase agreements.

  • HP is one of the most common motor finance products in the market.
  • The finance loaned to the customer is secured against the vehicle sold. Title to the vehicle remains with the finance company until the Option to Purchase fee has been paid. Title then passes to the customer.
  • Agreements are simply structured, normally up to a maximum of 5 years.
  • Flexible deposits and periods are set to meet a customer's budget.
  • Retaining title until the end of agreements gives lenders more security in the event of payment problems. The lender can also offer the customer more attractive terms and conditions because they retain title until the customer has paid off the agreement/vehicle in full.
  • Agreements can be regulated, exempt or unregulated under consumer credit regulation.  This all depends on the type of customer, the amount borrowed and the purpose of the lending.