Credit Sale Agreement : Car Finance

What is car finance?

While buying a new or used car, it is possible that you might go for a car finance agreement (credit sale agreement, lease, conditional sale etc.), since buying out of your savings can be a dumb thing to do, it leaves no money for other expenses. Car finance agreements help you get the car you want either through credit, lease or other methods.


Car dealership sells the car to the finance agency, who then owns the said car, the customer is supposed to make monthly payments under the agreement, in these circumstances, the finance agency allows the consumer to use the car as they please. Car financing options can be useful if you would like to return the car after some time.


If you are a used car buyer, then it is good to get a vehicle history check to know if there are any outstanding finance on car which you're looking to buy.

What is a credit sale agreement?

Credit Sale Agreement is a vehicle financing method that occurs between 3 parties, namely the supplier (dealer), the creditor (lender) and the debtor (customer), where the customer agrees to buy specific goods – in this case, a vehicle from a dealer – and repay to the lender the amount of money borrowed to buy those goods.


It takes a legal form similar to conditional sale agreement. Under credit sale agreement the buyer of the goods will immediately become the owner and there is no reclamation of goods. Often seen as a ‘buy now, pay later’ condition where buyer takes ownership of goods and pays the remaining price through installments.


In this type of financing, there is no deferment of title to the goods bought. Get an outstanding finance check before you buy a used one, check if it is on some type of vehicle financing or not.

Advantages of having a credit sale agreement

  • Under credit sale agreement goods can be bought at cash price. You usually have to pay interest but some suppliers offer interest free credit. Repayment is made by installments until you have paid the whole amount.

  • You become immediate owner of goods as soon as the contract is carried out and the goods can’t be returned. Supplier is unable to repossess goods even if you fall behind in repayments, however legal action can be taken against you if there are any arrears.
what is a credit sale agreement

Don’t opt for deals with no interest

Interest free offers are tempting and not really free from interest, the price of the goods is made higher to compensate for the “interest free” deal. As long as you keep paying on time, it won’t be an issue, but if there is a delay, then you would have to pay more than usual, because the interest has already been adjusted.


The lender may start charging interest and it could get you into a debt trap that you don’t want to fall under. Check your options thoroughly before choosing the right type of car finance.

Summary: Credit Sale Agreement

  • A Credit Sale agreement is a type of vehicle financing where entitlement to the goods is passed immediately to the customer involved.

  • It has a similar structure to the Hire Purchase or Conditional Sale, a credit sale agreement has flexible deposits and periods to meet a customer’s budget.

  • Credit Sale is an unsecured finance agreement, meaning that no collateral is involved, in this case the car can’t be taken as a collateral.

  • There are no restrictions on the number of miles or vehicle usage, since the customer is the legal owner of the car when it comes to Credit Sale.

  • In this, there is no sort of reclamation or termination.

  • It is possible to regulate, exempt and unregulated under the consumer credit regulation depending on the nature of the customer and the amount of credit

Buying a used car? Learn what to do

Obtain a full car history check before you buy your used car, to check outstanding finance on car, written off details, number plate changes, colour change details etc. It is important to thoroughly check all the details of a used car, since there are a lot of factors that need to be considered.

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