When it comes to buying goods on a finance agreement, it’s important to understand whether or not they’re protected. If you default on payments or something goes wrong with the product you’ve purchased, knowing your rights ahead of time can help avoid financial headaches down the road. But when exactly are goods on a regulated finance agreement classified as protected?
First, it’s important to note that there are two types of finance agreements: regulated and unregulated. Regulated agreements are those that fall under the Consumer Credit Act (CCA) 1974 and are typically taken out for less than £60,260. Unregulated agreements are those taken out for higher amounts or for business purposes.
Protected goods fall under regulated agreements and refer to goods that are purchased on credit (including hire purchase, personal contract purchase, and conditional sale agreements). These goods are typically physical items like cars, furniture, or appliances and are considered protected under the CCA.
However, not all goods purchased on a regulated finance agreement are protected. To be classified as protected, the goods in question must meet the following criteria:
1. The total cash price of the goods is between £100 and £60,260.
2. The finance agreement is regulated by the CCA.
3. The agreement includes a section outlining your rights to terminate the agreement, which typically starts after you’ve paid off a certain amount of the total amount due.
4. The goods are used by you or a member of your household for private use. Goods purchased for commercial use (e.g. for a business) are not protected.
If you meet all of the above criteria, your goods are classified as protected. This means that if you default on your payments or something goes wrong with the goods, you have certain rights and protections under the CCA.
For example, if you’ve paid off at least one-third of the total amount due on your finance agreement and decide that you no longer want the goods, you have the right to end the agreement and return the goods without any further payments. Additionally, if there’s a fault with the goods or they’re not as described, you have the right to a repair or replacement.
It’s important to note that if you default on payments, the finance company has the right to repossess the goods. However, they must follow certain legal procedures and cannot simply take the goods back without your consent.
In summary, if you’re purchasing goods on a regulated finance agreement, it’s important to understand whether or not they’re classified as protected. If they meet the criteria outlined above, you have certain rights and protections under the CCA that can help prevent financial headaches down the road.