The leaflet also covers conditional sale (CS) agreements which are similar to HP, but consumers are contracted to purchase the goods and will own them once all the instalments have been paid and the conditions of the agreement have been met. There will be no extra fee to pay at the end.
The OFT says signing up to HP and CS, like any other forms of credit, should be thought of as a purchasing decision in itself, separate from the decision to buy the goods in question, and that consumers need to shop around and explore whether these forms of credit are the best buy for them. They are advised that they may be able to borrow money on better terms through a personal loan, or to get a better deal from another HP or CS provider.
The OFT has worked with three car finance lenders, Lloyds, GE Capital and Forthright Finance, under the Unfair Terms in Consumer Contracts Regulations, to improve consumer contracts.
These contracts are now clearer about the importance of paying on time, and fairer about the circumstances in which the lender can end the agreement and the level of compensation payable if the consumer breaks the agreement. Consumers will therefore no longer be at risk of losing their goods and being potentially liable for substantial additional charges after only one late or missed payment. The OFT’s leaflet, 'Hire purchase - Making the right choice' can be downloaded from www.oft.gov.uk.