A hire-purchase agreement is one of the types of goods contract covered by the Consumer Rights Act 2015.

To understand how this fits within the wider legal framework, see What Goods Contracts Are Covered?.

What Is a Hire-Purchase Agreement?

Under a hire-purchase agreement, you hire goods and pay for them in instalments.

You do not own the goods at the start of the agreement. Ownership transfers only after you have made all required payments and met the conditions set out in the contract.

This type of agreement is commonly used for vehicles and high-value items.

How Is It Different from a Sales Contract?

Under a Sales Contract, ownership usually transfers immediately or shortly after payment.

Under hire-purchase, there is a hire period first. Ownership transfers only at the end of the agreement once the final payment (and any option-to-purchase fee) has been made.

What Rights Apply During the Hire Period?

Even though you do not yet own the goods, the statutory protections still apply.

The goods must:

  • Be of satisfactory quality.
  • Be fit for purpose.
  • Be as described.

These protections apply because the agreement is treated as a goods contract under the Act.

Ownership and Title

Legal ownership remains with the finance company or trader until the agreement is completed.

For more on how ownership works generally, see Ownership of Goods.

Ending a Hire-Purchase Agreement

Hire-purchase agreements are also regulated by consumer credit legislation. In some cases, you may have rights to end the agreement early, depending on how much has been paid.

This is separate from your rights if the goods are faulty.

How Is It Different from a Contract for Transfer of Goods?

Under a Contract for Transfer of Goods, ownership transfers according to the agreed terms without a hire phase.

Hire-purchase specifically involves a period of hire before ownership passes.

Why This Matters

Understanding whether your agreement is hire-purchase affects when ownership transfers and which additional financial regulations apply.

However, your core statutory protections regarding the quality and description of the goods still apply.