Buying a Static Holiday Caravan on Finance
Most holiday parks offer some sort of credit facility to assist with the purchase of a caravan or lodge. It’s important that you fully understand the terms being offered, and that you can afford the repayments. Most of the finance arrangements that we see are actually hire purchase agreements. There is nothing wrong with credit, so long as you know what you’re signing up for and that you’re happy with the repayment terms.
Have you got a hire purchase agreement?
If you buy something using a hire purchase agreement, you agree to pay for all or part of what you’ve bought in instalments. However, you are actually hiring the goods until you’ve paid your last instalment. You will then be asked if you wish to buy the goods.
You won’t own the goods until you have paid off all the instalments and paid the purchase fee. When you've done this, the goods transfer to your ownership. This is called getting good title.
Are hire purchase agreements regulated?
Yes. Hire purchase agreements are regulated by the Consumer Credit Act 1974. All agreements must contain specific information set out in the Act.
All companies offering hire purchase agreements must have a credit licence. You can check with the Office of Fair Trading whether your lender has a credit licence. If they don't, this is against the law and you should report them to Trading Standards.
Who is your hire purchase agreement with?
With most hire purchase agreements a separate finance company buys the goods from the trader and you hire them from the finance company. Sometimes the trader will arrange this for you.
For example, if you buy a car from a dealership, they may arrange the finance to buy it on hire purchase through a separate finance company, who will then own the car until you have paid the last instalment. They will then usually invite you to buy it for a small fee.
Occasionally, your hire purchase agreement may be with the trader who owns the goods and hires them to you too.
If something goes wrong with the goods you’ve bought
If your goods develop a fault or something else happens, for example they turn up damaged or don’t turn up at all, you have rights to take action under consumer law.
The law says your goods should be:
- of satisfactory quality
- fit for purpose
- match their description
If you discover a problem with your goods, tell the finance company immediately. If you do this (and the problem is not sorted out quickly), you should have the right to reject the goods and get a full refund.
If you don’t tell the finance company straightaway, you may lose the right to get a full refund and may only be entitled to the costs of repair.
Find out who is responsible for putting things right. Send copies of letters about the problem to the finance company and the trader. Even though only one of them may be liable, both should be aware of what’s happened.
You can use our letter to contact the hire purchase finance company
Think carefully about stopping payments in protest about the problem as this could be reported to a credit reference agency and be recorded on your credit file. This could affect your ability to get credit in the future. You can continue to make payments but make it clear that you are paying ‘under protest’ while the problem is being sorted out.
If you need more help
Check whether a hire purchase lender has a credit licence.
More about the Consumer Credit Act 1974
Consumer Credit Association (CCA)
The Consumer Credit Association (CCA) represents over 75 per cent of firms that provided unsecured loans in the home credit industry. The CCA has a code of practice which its members must comply with, as well as a Business Conduct Pledge.
The CCA also has internal conciliation and arbitration schemes to help resolve complaints made against its members.
Consumer Credit Association (CCA)
Consumer Credit Trade Association (CCTA)
The Consumer Credit Trade Association represents credit lenders including finance houses, retailers and building societies. The CCTA has a code of practice with which its members must comply.
The CCTA has an internal conciliation scheme to resolve complaints made against its members. There is also an independent arbitration scheme, run by the Chartered Institute of Arbitrators.
Consumer Credit Trade Association
Suite 4 The Wave
1 View Croft Road
Finance and Leasing Association (FLA)
The Finance and Leasing Association represents the UK and finance leasing industry, including creditors offering hire purchase and conditional sale agreements, secured and unsecured loans, credit cards and store cards. The FLA has a code of practice with which all its full members must comply.
The FLA has an independent arbitration scheme for consumer complaints which is run by the Chartered Institute of Arbitrators.
Finance and Leasing Association
15 - 19 Kingsway