Conditional Sale

Conditional Sale is a purchase agreement between a customer and a finance company secured against the vehicle, the customer will automatically own the vehicle after all the repayments have been made.


  • Deposit - usually optional at the discretion of the customer
  • Fees - there are usually fees attached to a Conditional Sale agreement
  • Payments - payments are fixed for the duration of the agreement
  • Mileage - there are no mileage restrictions on a Conditional Sale agreement
  • Insurance - the vehicle will need to be comprehensively insured for the period of hire
  • Condition - the customer must keep the vehicle in a roadworthy condition
  • Interest Rate - the interest rate is fixed for the duration of the agreement

Early Settlement

A Conditional Sale Agreement can be settled at any time by the customer paying the balance of finance outstanding to the lender. The lender may allow the customer a rebate of the interest if the outstanding finance balance is settled before the agreement end date. If it is a Conditional Sale Agreement regulated by the FCA, then the minimum amount of rebate will be set out in the FCA's rules. You can make additional payments & receive a corresponding reduction in interest.

End of the agreement

At the end of a Conditional Sale agreement, once all the contracted payments have been made, the customer will automatically take the legal title to the goods.

Voluntary termination

Voluntary termination, also referred to as the Half Rule, allows a customer to terminate the agreement & hand the vehicle back to the lender. To do this, half of the total amount repayable in the agreement must have been paid. This is the full price of the car plus the total interest charges & fees. The vehicle must be in a reasonable condition for its age and mileage & any arrears will also have to be paid.