Defined
What Is Conditional Sale?
Conditional sale is a finance agreement where you pay in instalments and automatically own the car once the last payment is made. It works like HP but with no option-to-purchase fee at the end.
Conditional sale is a regulated agreement under the Consumer Credit Act 1974, common on used-car finance. You agree to buy the car from the outset, and ownership transfers to you automatically when you've paid the final instalment.
How conditional sale works
You pay a deposit then fixed monthly instalments, and the car becomes yours automatically with the last payment — no extra fee to trigger ownership. Until then, the lender legally owns it.
Because the lender owns the car during the term, you can't sell it without settling the finance first. Conditional sale is nearly identical to HP — the practical difference is that HP charges a small option-to-purchase fee at the end and conditional sale does not.
A worked example
A £20,000 car with £2,000 down over 48 months at 9.9% APR costs about £452 a month and around £23,695 in total — and it's yours once the final instalment lands.
Worked example
Frequently asked
What is a conditional sale agreement?
What's the difference between conditional sale and HP?
Do you own the car on conditional sale?
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