Know the law - buying on credit
Buying goods on credit gives you some additional protection where the goods are faulty or where a service is unsatisfactory, providing they cost more than £100. This will apply even if it was only the deposit that was paid on credit.
Section 75 of the Consumer Credit Act 1974 makes the credit card company or finance company equally liable for any claim you may have against the seller arising where goods are faulty or have been misrepresented, or for poor workmanship and inadequate services.
Section 56 of the Consumer Credit Act 1974 also makes the credit card company or the finance company liable for any representations made during negotiations between you and the supplier, that took place prior to the contract being made, which later turn out to be untrue.
Your rights to copies of agreements
When you sign a credit agreement you should receive a copy of that agreement to take with you. You should also receive by post a second copy with the finance company's signature if the agreement was not signed on their behalf at the same time you signed. Once all parties have signed, the agreement is legally binding.
There are two circumstances where, after signing a credit agreement, you may be able to cancel.
Withdrawal - When you sign a credit agreement you may withdraw from the contract at any time before the agreement is signed by the other party on behalf of the lender. There is no contract until all parties have agreed. This applies whether you have signed at home or on business premises.
Cancellation - If you sign a credit agreement at home following face to face contact with the supplier you must be given written notice of your cancellation rights. These should be written into the agreement you sign and you should be given a copy of this agreement at the time you sign it. In addition, you should receive either a second copy of the agreement signed by the finance company through the post, or a separate notice of your cancellation rights. You have five days from when you receive this second copy or notice to cancel the agreement.
If you cancel, you are entitled to recover any deposit that you have paid.
Withholding payments
Beware of stopping any payments due under a credit agreement. You will be breaking the terms of the agreement and may be sued for any arrears. This may make it difficult to obtain credit in the future. You should seek advice from us before stopping payments.
Hire purchase and conditional sale agreements
When buying goods on a hire purchase or conditional sale agreement the goods belong to the finance company until you have made the final payment. There are additional rules that apply in these circumstances that you need to be aware of.
This type of agreement is most commonly used for the purchase of motor vehicles.
- If you fall behind with the repayments the car may be repossessed. Once you have paid over a third of the total amount due, the finance company must have your express permission to repossess the car or else obtain a court order.
- If the finance company repossess the vehicle, you may be liable for the outstanding balance on the agreement less the proceeds from the sale of the vehicle at auction.
- You may terminate the agreement once you have paid half of the total amount, plus any arrears, provided you return the goods in a reasonable condition.
- The finance company, as the owner of the goods, is responsible for their condition under the Supply of Goods (Implied Terms) Act 1973 as amended. Any claim that the goods are not of satisfactory quality, not as described, or not fit for their purpose, would be against the finance company. The supplier would be liable to the finance company. For more information go to our 'Consumer Protection - Your Rights when Buying Goods' webpage
How to contact us
Environment and Development Services
Trading Standards
Textile Hall
Manchester Road
Bury
BL9 0DG
Phone: 0161 253 5566
Fax: 0161 253 5547
E-mail: tradingstandards@bury.gov.uk
On-line: make a comment or request advice
