Cancel something you bought on hire purchase
You can cancel and return something you’re paying off through hire purchase at any time, but you might owe money to the company you bought it from.
‘Hire purchase’ is a type of borrowing where you agree to pay instalments on an item but you don’t own the item until you’ve paid off the agreement. It’s often used for buying cars, furniture or white goods. If the agreement says you must buy the item at the end of the period, this is called ‘conditional sale’.
You might have other options if you’re struggling to keep up the payments (eg paying a reduced amount over a longer period). Contact the company to discuss your situation, or get advice from the Citizens Advice consumer service (contact Consumerline if you're in Northern Ireland).
Getting a full refund
There are very limited circumstances when you can return the item and get a full refund. You must have signed up in the last 14 days and signed up in one of the following ways:
- by phone
- in your home
- by mail order
You’ll still be within the ‘cooling-off period’ if this is the case, which means you can cancel without charge. Contact the company and tell them you’d like to cancel.
How much you’ll owe if you cancel
If you're not eligible for a refund, you might owe the company money if you cancel.
If you’ve paid off less than half of the item, you legally only have to pay for half the cost of the item minus what you’ve already paid in instalments.
If you’ve paid off half the item or more, you legally don’t have to pay any more.
You bought a £900 sofa on hire purchase. You agreed to pay for it over 2 years for £37.50 a month. After 6 months you decide you want to return it. Half the price of the sofa is £450 and you’ve paid £225 so far. Because you’ve paid less than half the item, you owe the company another £225.
You bought a £600 washing machine on hire purchase. You agreed to pay for it over 2 years for £25 a month. After 1 year and 3 months you can’t keep up the payments and have to cancel the agreement. Since you’ve already paid for over half of the item, you don’t have to pay any more.
Call or write to the company - you can use our template letter to help you.
You’ll need to return the item or arrange with the company for it to be picked up.
If the company is trying to make you pay more
Contact the Citizens Advice consumer helpline for advice if the company is trying to make you pay more than you legally owe - a trained adviser can give you advice. Contact Consumerline if you're in Northern Ireland.
If the company wants to repossess your item
Tell the company why you need your item. They shouldn’t repossess anything you need until 31 October 2020, if:
the company has paused your payments for up to 3 months - this is called a 'deferral period’
they haven’t explored other options first, for example - helping you to make a payment plan
They shouldn't repossess any essential items after 31 October if you can’t replace it because you’re:
in an area at high or very high alert - this is also known as 'tier 2' or 'tier 3'
The finance company should keep you up to date about their plan for repossessing your goods. They should also explain how delaying the repossession will affect your situation - for example, it’s likely to increase the debt you owe.
If you feel your finance company hasn’t kept you up to date, you can complain to an ombudsman.
You can also check when finance companies can repossess vehicles and goods.