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About this template
What is this template?
This is a tripartite contract for the hire-purchase of a motor vehicle involving an owner/funder, a hirer, and a dealer/surety. It is not a standard lease or a simple loan, as it explicitly provides for the transfer of ownership only after the final installment is paid and requires the dealer to guarantee the hirer's payments. The document includes specific provisions for the execution of a promissory note as collateral and restrictions on the vehicle's geographic use.
When should you use it?
Use this when a buyer wants to finance a car from a dealer but the dealer requires a separate finance company to hold title until the debt is cleared. If the transaction is a direct loan from a bank where the buyer takes ownership immediately, use a Chattel Mortgage or Vehicle Loan Agreement instead.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 2 | Option to Purchase | The Hirer pays an initial sum of Rs. [amount] for the option to purchase, which is credited toward the final price. |
| 3 | Possession and Use | The Hirer is prohibited from taking the car out of [city] without the Owner's prior written consent. |
| 5 | Insurance | The Hirer must insure the car for Rs. [amount] in the joint names of the Owner and Hirer. |
| 7 | Termination and Repossession | The Owner may terminate the hiring without notice and seize the vehicle if hire payments are [number] days overdue. |
| 10 | Collateral Security | The Hirer and Surety must execute a promissory note with joint and several liability covering the total hire amount. |
| 12 | Registration | Registration is held in the Hirer's name under the Motor Vehicles Act 1988, subject to transfer upon Owner demand. |
| 14 | Transfer of Ownership | Ownership remains with the Owner until the Hirer completes all monthly rent payments and sums due under the agreement. |
| 16 | Surety Guarantee | The Dealer guarantees the payment of all rents and performance of conditions by the Hirer as a Surety. |
| 18 | Arbitration | Disputes are referred to arbitration under the Arbitration & Conciliation Act 1996. |
Who it's for
- an individual financing a private car purchase through a three-party dealer-funder structure
- a finance company acquiring a vehicle from a dealer specifically to lease it back to a customer
- a car dealer acting as a guarantor for a customer's finance payments to a third-party owner
How long it runs and how it's signed
Law it's drafted under
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