Hire purchase is a convenient way to purchase items that we can’t afford to purchase outright. The main benefit of a hire purchase agreement is the opportunity to spread the cost. You are allowed to acquire the items immediately after signing the agreement and paying the down payment. Most buyers opting for hire purchase hope to utilize their income to meet their obligations. As the hirer, you are required to pay installments to acquire the items.
Reasons for terminating a hire purchase agreement
There are a number of reasons why you might consider ending or canceling your hire purchase contract. One of the most common reasons to cancel a hire purchase agreement is the inability to keep up with payments. Some hirers experience changes in their financial situation making it difficult for them to keep up with daily, weekly, or monthly installments.
Another common reason to consider ending a hire purchase agreement is when the hirer no longer needs the items. A good example is when you choose to invest in a TV. You might no longer need the TV, or you might settle for a bigger one.
How to End Your Hire Purchase Agreement
As the hirer, you have the right to end a hire purchase agreement. However, there is a need to follow the proper guidelines when canceling the agreement.
The hirer is allowed to end or terminate the hire purchase agreement by writing a notice to the owner. One should immediately write the notice when they can no longer afford the payment or in a case where they no longer need the items. However, to end the HP contract, it is a requirement that you pay all the installments due up to the time you are writing the notice of termination.
Some agreements entail a clause that guarantees the owner not less than half the total price of the asset. This means that one will need to pay more cash to the lender if they intend to end the hire purchase agreement before achieving the amount.
It is always advisable to spend time and effort understanding a hire purchase agreement before signing it. This helps you learn the conditions under which you can end the hire purchase agreement.
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