When buying furniture, appliances or other “bigger budget” items and accessories, oftentimes consumers enter into hire purchase agreements. Hire purchase (HP) is an agreement whereby a person hires goods for a period of time by paying instalments, and can own the goods at the end of the agreement if all instalments are paid. When entering into these agreements, consumers should be mindful of the following:
- Always read your hire purchase contract VERY carefully before committing yourself to any agreement. A copy of the HP agreement must be given to you. Keep this copy safe.
- Any breach in contract terms can result in the item under HP being repossessed.
- Goods purchased by a consumer under any HP agreement belong to the seller until the item has been paid in full, therefore, your item can be repossessed by the seller for non-payment of installments, so ensure all installments are paid.
- Keep stock/record of all receipts when paying installments.
- If you change address within the duration of the HP contract, you must inform the seller of the new address where the item is now located. If you do not and the seller becomes aware, the item can be repossessed even though the item is not in arrears, since this serves as a breach of contract.
- Remember, HP always costs you more in the long run. You may end up paying almost two times the cash price when you buy on HP.
- Don’t forget to inspect the item thoroughly and ensure that all guarantee/warranty agreements are in place as well.
- A guarantee under any HP agreement applies in the same way as if goods were bought with cash. If there is a fault with the goods, you have the right to choose to have the item repaired under the guarantee or to seek a full refund or exchange from the owner.
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