Merlicia Williams-Davy
Information Officer, Consumer Affairs Department
FOR several consumers, when purchasing durable goods like furniture and appliances, buying on credit has never been an option. For many others, while the preferred choice of payment is to pay the cash price upfront, this however, is not always possible, as their cash flow does not permit it. Therefore, these consumers are forced to go into a hire purchase agreement.
Hire purchase is an agreement between a seller or owner of a good and a buyer or hirer. It is agreed that the buyer or hirer pays for the good in regular installments while enjoying the use of it. During the repayment period, the title or ownership is not passed on to the buyer; and so, the good does not belong to the buyer. Title or ownership is passed onto the buyer only upon the full payment of the hire purchase price.
A hire purchase agreement, once signed by both parties, or all other parties involved is legally binding. This agreement is governed by the Consumer Credit Act No. 29 of 2006.
The Act provides that in making a hire purchase agreement the following must be adhered to:
• The owner must indicate the hire purchase price as well as all other costs associated with the agreement.
• The amount or the minimum amount to be paid for each installment as well as the number of installments to be paid must be clearly stated.
• The hirer can terminate the agreement at any time before the final payment by giving the owner written notice and paying off any arrears of installments.
• Where 70 per cent of the hire purchase price has already been paid, the owner cannot recover the goods from the buyer without obtaining a court order.
• Where less than 70 per cent of the hire purchase price has been paid, the owner must give the buyer 21 clear days written notice of his intention to recover or repossess the goods. Additionally, the owner has to give the buyer a period of up to ten days to remedy the default. If the buyer pays all installments due within the ten days of receiving the notice, the agreement will continue in force and the owner cannot then recover the goods.
• Where the hire purchase price is paid before the date given for the final payment, the buyer is entitled to a rebate or a refund. However, if the regular price of the goods referred to in the hire purchase agreement is less than one hundred dollars, the buyer is not entitled to any rebate.
An owner cannot make an agreement under a hire purchase agreement which has terms which are contrary to these key provisions of the Act, or which seek to avoid liability for forcible entry, or impose additional liability on the buyer. If one does so, those terms will have no effect.
The Consumer Credit Act is legally enforceable; it is an important piece of consumer protection legislation and anyone who contravenes it is liable on summary conviction to fines ranging from five hundred to five thousand dollars or to imprisonment for a term not exceeding one year or to both.
Consumers and businesses are minded to take note of these salient provisions of the Consumer Credit Act so as to safeguard their economic welfare.
For further information contact the Consumer Affairs Department of the Department of Commerce, International Trade, Investment, Enterprise Development and Consumer Affairs at 468-4229/31.