Taking out a hire purchase agreement means that the car which is in your possession is in principle, hired until the payment for the car has been settled at which time you will be classed as the owner of the car.
If repayments for the car are not made, it is possible that the car will be repossessed.
A lender can take legal action against you for the arrears you owe but they cannot enter your premises to repossess any goods without your consent, they must first apply to the court for a repossession order.
Before a creditor can take any further action, you must be served with a default notice. Once the default notice has been served, the lender can then apply to the court for a repossession order.
If you have paid less than one third of the value you borrowed the lender can repossess your goods without a court order. The bailiff, or representative of the lender cannot however enter your premises to repossess these goods without your consent. If you don’t give your consent and a default notice has been served, the lender will then apply to the court for a repossession order.
If you wish to continue with payments but need some extra time, once you have received the default notice you can apply for a Time order N440 form to give you time to get funds together to continue payments.
If you have paid one third or more of the monies borrowed your goods will then be classed as “protected”. This means that goods cannot be repossessed without an order from the court.
If you wish to keep the goods you can contact the lender and ask them if they are willing to negotiate reduced repayments, this is a step we would recommend in all scenarios.
Below is a simple video explain what is car repossession and how a car can be repossessed.
- Reduce the risk of car repossession by shopping around for a cheaper credit deal?
- Reduce the risk of car repossession by deciding whether HP is the right form of credit for you?
- If you work out the total amount you will have to repay then hopefully car repossession will not be a problem.
- Have you checked that you can afford the repayments, if not then you car may get repossessed.
- You should check whether you really need any insurance offered, as this often fuels car repossession.
- To avoid car repossession you should check the small print to really understood what your rights are.
If you have any doubts regarding a hire purchase or conditional sales agreement, we advise consulting trading standards or getting further advice by speaking to a solicitor.