What are conditional sale agreements and when will they come into play?

Conditional sale agreement

A conditional sale agreement is an agreement which deals with the sale of goods to a consumer. A condition is usually included in the agreement which states that the goods don’t belong to the buyer until they have paid the final instalment. Title to the goods remains with the lender until then and they may be allowed to repossess the goods if the buyer falls behind on their payments.

Legislation covering conditional sale agreements

Under the Consumer Credit Act 1974 (CCA 1974), a conditional sale agreement must:

  • be in writing;
  • contain a statement that it is regulated by the Consumer Credit Act 1974;
  • contain prescribed information, including the:
      identity and address of the buyer and seller; duration of the agreement; amount of credit to be provided under the agreement; annual percentage rate of interest (APR); statement indicating how and when the credit to be advanced under the agreement is to be drawn down; total amount payable; timing and amount of repayments; details of any additional charges; interest for late payment; description of any contract of insurance the debtor is required to take out; statement providing details of the debtor’s right under s 66A of CCA 1974 to withdraw from the agreement; statement providing details of the debtor’s right of early repayment under s 94 of CCA 1974; statement explaining how and when the debtor can terminate the agreement under s 99 of CCA 1974; the debtor’s maximum liability under s 100 of CCA 1974; statement explaining that the debtor has the right to complain to the Financial Ombudsman Service; statement specifying that the Office of Fair Trading is the supervisory authority under CCA 1974.

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For more information on:

  • What is the difference between a conditional sale agreement and a hire purchase agreement?
  • What is the difference between a conditional sale agreement and a credit sale agreement?
  • What happens if I can no longer afford to keep up with the payments?
  • Is it possible for me to be able to hold onto the goods?
  • What will happen if a conditional sale agreement comes to an end before all of the payments have been made?