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Tackling your debts

Are you still paying for things you don’t even own?

Posted 25 September 2014 by Emily Bancroft

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<p>One in five Brits are still paying for items they don’t own anymore, because their credit agreement remains active despite them parting with the product at the centre of it.</p>

You’re not the only one if you are. In fact, the equivalent of 12.6 million people across the UK are paying off a debt for something that they no longer own.

Outstanding credit

The credit agreement Brits were most likely to still be locked into even after they had parted with the item at the centre of it was the mobile phone contract. According to a recent survey*, nearly half of people with outstanding credit arrangements for things they didn’t own anymore said they had an active contract for an old mobile phone. And nearly a third were still liable for a credit agreement for furniture, even though they didn’t still have that furniture in their home.


Meanwhile, close to half of these respondents had a car finance arrangement they were paying off … despite no longer owning the car.


Of course, hire purchase and conditional sale finance agreements cannot be closed or sold until the contract has been paid in full. As a result, the lender owns the item on finance until the very last payment has been made, and selling it without first seeking the lender’s permission would be in breach of the contract.

Tempted by an upgrade

In the majority of cases, the most popular reason for parting with the product at the centre of the credit arrangement was the owner deciding to upgrade it. Half of people with an active contract for a phone they no longer owned said they had gone for an upgrade before they had finished paying off the original phone … although with the speed at which phone manufacturers bring out new mobiles, this may not be surprising.


Even in cases where people were repaying items you would think they would have in their possession for many years … like a car or furniture … the chance to upgrade had proved too tempting for some. Half of people with car finance agreements for vehicles they didn’t own anymore said they had upgraded, as did two-fifths of people with a credit agreement in place for furniture.

Check the small print

Not all credit agreements allow you to sell or upgrade the product before you have completed your repayments, so make sure you check the small print of your agreement before you act. As mentioned above, with hire purchase agreements you don’t own the vehicle or other product until you have made your final payment … so, technically, the car’s not yours to sell or part with.

Think carefully

You should think very carefully before agreeing to a credit arrangement in order to fund a new product. At the very least you should consider whether you really need it, how long you expect to have it for and whether you will be tempted to upgrade if something better comes along. This is because if you part with the item and get a replacement before you have finished paying for it, you will still need to meet your repayments.


Worse still, you may have to take out a credit agreement for the replacement … which means having two debts you need to clear. If your finances are already stretched … which might be why you got the item on credit in the first place … this could leave you in a difficult position.


As with any credit arrangement, you should carefully consider whether you can afford to keep up with the repayments … even if you ultimately decide to part with the item. And if you’re having problems keeping up with all of your credit agreements and have started to miss payments, don’t ignore the situation … you could give us a call and talk it through with one of our expert advisors.


*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 12th August and 23rd August 2014, of whom 630 were Scottish. Figures have been extrapolated to fit ONS 2013 population estimates of 64.1 million.

by Emily Bancroft

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.