Conditional Sale (CS) agreements are a straightforward way to finance a vehicle and are similar to Hire Purchase (HP) agreements. This type of agreement is ideal for those who are confident they want to own the car outright at the end of the term.
A Conditional Sale agreement is a type of finance that allows you to spread the cost of a vehicle over a fixed period, typically 1 to 5 years. The finance is secured against the vehicle, which means the lender remains the legal owner until all repayments have been made.
Unlike Hire Purchase, there is no Option to Purchase fee at the end of the agreement. Once the final repayment is made, ownership of the vehicle automatically transfers to you.
Several features make Conditional Sale agreements distinct:
Once the final repayment is made, the lender will remove their interest in the vehicle, and ownership will automatically transfer to you. There is no additional fee required.
You can choose to settle the agreement early by paying the total outstanding balance. This allows you to gain ownership of the vehicle sooner if desired.
While you are responsible for the car during the agreement, the lender remains the legal owner until all repayments are complete. This means the car cannot be sold or modified without the lender’s consent.
Conditional Sale agreements require a fixed monthly payment. Ensure the agreed repayment plan aligns with your budget over the entire term.
If you choose to settle early, you may save on interest costs. Be sure to check the terms for any early repayment charges.
There is no option to purchase fee at the end of the agreement. You would own the car once all the repayments have been made.
Flexible terms from 1-5 years (the longer the term, the more interest you will pay).
There are no mileage restrictions under a Conditional Sale. Some lenders may impose certain restrictions on the use, location and condition of the vehicle.
Monthly payments are more expensive compared to Personal Contract Purchase and Leasing deals.
You don't own the car until you make the final payment.
You cannot sell or modify the vehicle during the course of the agreement without the finance company's permission.
If you fail to keep up all your repayments, the finance company can repossess the car.
