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KNOW YOUR RIGHTS: Hire Purchase Agreements

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Deirdre Vann Bourke, Information Manager with South Munster Citizens Information Service discusses hire purchase (HP) agreements.

“A HP agreement is a credit agreement. You hire an item (for example, a car, laptop or television) and pay an agreed amount in monthly payments. You do not own the item until you have made the final payment. Personal Contract Plans (PCPs) are a type of hire purchase agreement.”

What you should know:

* Some HP agreements have a balloon payment at the end of the agreement which is normally higher than your usual monthly payments.
* You do not legally own the item until after the final payment is made, but you do have full use of the item throughout the payment period.
* You cannot legally sell the item until the agreement has been paid off.
* If you do not keep up the repayments, the item can be seized.
* You have the right to end the agreement at any time.

You can take out a hire purchase agreement with a bank, building society or finance company. Hire purchase can also be arranged through a retailer. If you take out a HP agreement with a retailer, you should know that the store or garage is not actually providing the loan. It is acting as an agent for a finance company and will earn commission from the finance company for arranging the loan. This is called being a credit intermediary and the agent must be authorised by the Competition and Consumer Protection Commission (CCPC) to do this.

Hire purchase agreements usually last between two and five years. Most HP agreements last three years. You should read a hire purchase contract very carefully before committing yourself to any agreement.

Personal Contract Plans (PCPs)

This is a specific type of hire purchase agreement offered by car dealers as a way to pay for a car. In a PCP contract, you pay a deposit and continue to make regular instalments, usually over three years. There is usually a large lump sum payment at the end of the contract.

At the end of the contract you can either:

Pay the final lump sum and keep the car, or
Return the car to the seller (you can take out a new PCP arrangement on another car)

You do not own the car until the final payment is made. You must stick to certain restrictions on usage and maintenance, such as mileage limits and servicing obligations.

PCPs can seem very attractive because they usually have very low monthly repayments but they can be very complex compared to other types of car finance. It is important to understand all the terms and conditions before you sign up for a PCP.

Hire purchase costs

To calculate the real cost of a hire purchase agreement:

Find the total hire purchase price
Find the price of a cash purchase of the same item
Deduct the cash price (2) from the total hire purchase price (1)

Different lenders have different hire purchase costs. Some will quote an APR (Annual Percentage Rate). This can help you to compare hire purchase costs. It may be misleading to compare a hire purchase APR with that of a normal bank or credit union loan. This is because you are paying for the hire of the goods. Unlike a loan, you do not own them until the last instalment of the HP agreement has been paid.

There is a maximum interest rate of 23% APR for hire purchase agreements since 16 May 2022.

Hire purchase charges and fees

Hire purchase agreements may also involve additional fees and charges. These fees and charges vary, but may include:

* Documentation fees
* Penalty fees for missed or late payments
* Interest surcharge for missed repayments - this means an additional amount of interest will be charged on the amount unpaid
* Completion fee for ownership of the goods to pass to you – sometimes you have to pay a balloon payment much higher than your usual monthly payments
* Repossession charges - you could be charged for repossession costs or for failure to take reasonable care
* Rescheduling charge - if your lender agrees to change the loan terms

Any balloon payment charged on a hire purchase loan has the effect of postponing part of the costs until after the loan. This means that in the earlier months and years, you are paying less off your loan than you would for a bank or a credit union loan. You have to pay the balloon payment to clear the loan and to become the legal owner.

What must be in a HP agreement contract?

A hire purchase agreement is drawn up and signed by you (the hirer) and on behalf of the owner (the finance company). If there is a retailer involved, for example, a garage, it also signs the agreement and supplies the items in question.

The hire purchase must include:

* The item covered under the agreement, for example, a car or computer
* The cash price of the item
* The hire purchase price. This is the total amount you will pay over the life of the loan. The hire purchase price is the monthly payment or instalment multiplied by the number of instalments which you have to make.
* The amount of each instalment you have to pay. Sometimes the final instalment is much larger than all the others (a balloon payment).
* The date you must pay each instalment
* The names and addresses of all the parties to the agreement.
* A statement that you have the right to withdraw from the agreement within 10 days of receiving a copy of the agreement. This is known as a cooling off period. Often you are asked to give away this right by signing a waiver. You do not have to sign this waiver
* A statement that you must tell the owner (finance company) of the locations of the item
* The words "Hire Purchase Agreement" which must be stated clearly and in a prominent place on the agreement form
* The fees, charges, and penalties that apply
* The Annual Percentage Rate (APR) charged (for agreements made since 16 May 2022).

Unless all of these requirements are contained in the agreement, the agreement may not be legally enforceable.
 

Can I end a HP agreement?

You can end the agreement at any time by giving notice in writing to the owner of the goods (the finance company). This is a legal right under the Consumer Credit Act 1995. You should be aware that breaking a hire purchase contract before its normal end date usually involves penalties.

You have two options:

* Buy the item earlier than planned. You can own the item by paying the difference between the amount already paid and the total hire purchase price. There is usually a reduction on the overall amount due as you are paying the loan off earlier than planned. This reduction is calculated using a recognised formula for early loan repayments. However, the amount of any reduction is relatively small.

* Return the item to the owner and pay half the amount of the total hire purchase price (if the total of instalments already paid have not reached that amount). This is called the half-rule. You do not have to pay half the hire purchase price immediately. Ending an agreement using the half rule may not always be the best solution.

For more information in relation to this topic, please contact a member of the local Citizens Information team in Kerry on 0818 07 7860, they will be happy to assist and make an appointment if necessary. The offices are staffed from Monday to Friday from 10am to 4pm. Alternatively you can email on tralee@citinfo.ie or log on to www.citizensinformation.ie for further information.

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Top 10 Essential tips for Leaving Cert Students in lead up to June 5

The final weekend leading up to the Leaving Cert exams can be very tough, as you try to balance last minute revision with much needed rest after a long, exhausting […]

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The final weekend leading up to the Leaving Cert exams can be very tough, as you try to balance last minute revision with much needed rest after a long, exhausting year.

The natural anxiety felt by students is often heightened by the annual media hype around the state exams and it is really important that you do your best to manage that stress effectively, so that you are ready to perform to the best of your ability once the exams start. The following tips may help to keep you focused and a little calmer in the lead up to June 5.

1. Review, don’t cram – Focus on summary notes, flashcards, or mind maps. This reinforces what you’ve already studied. Prioritise areas where you feel less confident, but don’t try to learn new material.

2. Practise past papers – Review marking schemes and time allocation for each question you will need to answer on each paper. Practise a sample of questions against the clock. This will maximise your scoring potential.

3. Organise your materials – Check the exam timetable and highlight your own exams. Prepare the stationary that you need, gather pens, pencils, calculators, and so on. Pack your bag the night before to avoid last-minute stress.

4. Maintain a healthy balance – Aim for 8 hours of sleep each night. Proper rest is crucial for memory, concentration and stamina. Eat well, include proteins, healthy fats, and complex carbs in your meals to maintain energy levels. Drink plenty of water, hydration is essential.

5. Try to manage stress – Schedule short breaks during study sessions and do something enjoyable and relaxing, like a short walk, playing or listening to music. Get fresh air and some light exercise. Use relaxation techniques like breathing exercise, mindfulness and meditation.

6. Focus on a positive mindset – Focus on your strengths and remind yourself of your preparation. Concentrate on what you know and not on what you think you don’t! Try to avoid negative self-talk and steer clear of discussions that heighten anxiety, such as comparing how much you’ve studied with friends.

7. Plan your weekend – Create a realistic timetable for the weekend, balancing study sessions with breaks and relaxation and don’t overdo the study. You need plenty of energy for the exams.

8. Stay connected – Talk to friends and family, if you are feeling overwhelmed reach out and get support from loved ones. If it’s helpful, have a short, focused study session with friends to clarify doubts.

9. Keep things in perspective – The Leaving Cert is important but won’t define you and regardless of what happens you have several options open to you. Try to reframe the media hype as the whole country getting behind you, for what they know to be a tough time for you.

10. Get Set for exam day – Double-check the venue, seating arrangements, and required materials for the day of the exam. On the evening before the exam, do a light review of key concepts but avoid heavy studying. Ensure you know how to get to the exam venue and plan to arrive early (at least 30 mins on the first day). Decide what you’ll wear to avoid rushing in the morning and have your water and snacks ready to go.

Above all else, give the exams your best shot! Once they are over you have a lovely ‘study-free’ summer and bright future to look forward to. Go n-éirí libh ar fad, the very best of luck to each and every one of you!

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Disability toilets for Killarney Library

Works to build new toilet facilities for people with disabilities should commence later this year. Cllr Marie Moloney tabled a motion at a recent Kerry County Council meeting. She said: […]

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Works to build new toilet facilities for people with disabilities should commence later this year.

Cllr Marie Moloney tabled a motion at a recent Kerry County Council meeting.
She said: “Application has been made for funding to the Department. As soon as the funding is approved, work will commence on the provision of Disabled Toilet Facilities.
“While ramps are installed for accessibility, it is unacceptable that any public building be without disabled toilet facilities in this day and age.
“I am aware of several people with a disability who constantly use the services of the Library and are very happy with the staff and the services that Killarney Library offers but are disappointed at the lack of disabled toilets.”
“I will be keeping the pressure on to have these facilities provided as soon as possible.”

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