Hire Purchase was was first used in the 19th Century as a means of enabling carriers to purchase wagons for use in their business. Basically, it means exactly what its name suggests; a hiring of the goods until a certain condition is met, when they become the property of the hirer. This condition is usually the completion of all of the payments. The advantage to the finance company is obvious, the property in the goods remains theirs until the goods are paid for. Therefore the finance company has, at least a partial security for their debt. In the 1950s and 1960s it acquired a bad reputation. This was due to the way that some finance companies were dealing with their customers. This lead to the first Hire Purchase Acts. These acts, in the main, established two fundamental and far reaching legal principals:

1/ One one third of the total amount payable has been paid, the finance company cannot recover the goods without the hirers consent. Unless the finance company first obtains a Court Order.

2/ If an innocent "private buyer in good faith" purchases the goods from the hirer, the finance company cannot take those goods from the innocent purchaser. That is, the finance companies property in those goods is lost. To meet those conditions the innocent buyer must:

A/ Be a genuine private buyer, that is not be engaged in any way in the motor trade.

B/ Be ignorant of the fact that the person from whom the goods was purchased was hiring them under a Hire Purchase agreement.

These principals have remained intact up to the present day. In the early 1970s the Hire Purchase Acts and Money Lenders Acts where replaced by new piece of legislation, The Consumer Credit Act 1974. The essential parts of the old Hire Purchase Acts remained intact, however there was now a requirement for businesses engaged in the offering of credit to be licenced.

In later years, civil procedures have been the subject of two judicial reviews, the first instigated by the then Lord Chancellor, the other (recent) following a report by Lord Woolfe. Although neither of these has lead to any legislative changes, radical changes have been made to the County Court system. The result of all this is that the system is now much faster, slicker, and easier to use. Under the present system, anyone running a finance company, would do well to consider undertaking their own legal work.