Some questions I have been asked recently and also over the years are things like:
I bought a laptop on finance and it has died after 3 months. Do I need to still make the payments?
We had a conservatory added to our home and financed it through a lender the builder recommended. The work is very shoddy and we do not want to pay for it. Can we do this?
I financed a (insert item here), and now I want to give it back. Can I do this?
All good questions, and all related to a third party finance company.
So, Explain How Third Party Financing Works
In the simplest terms, third party financing is just as it states, and is like this:
- You purchase an item or have some form of service work done.
- You cannot afford to pay cash or in full for the product or service.
- A third party is involved for the financing.
An example would be the following:
You have some work done on your property, like a conservatory built, new windows, etc. The builder or worker charges £5,000 for the service. They may recommend a finance company, which in turn lends you the £5,000, but pays the builder directly.
There are now three (3) of you involved in this transaction, you the builder and the finance company. Hence the name, third party financing, or third party loan agreement.
Another example may be you purchase an item, such as a new computer, and the store states they offer financing, which you agree to, and are approved for.
It is not the actual store offering the financing, but a third party financing firm or loan company.
Now the next question is the big one, if you are not happy with the service or product provided, can you withhold payment?
Can I Withhold Payment if I Am Not Happy With The Service or Product?
The quick answer is……NO!
The agreement for the financing of the service or product is between you and the finance company. The builder or the store that sold the product are now out of the loop. If you are unhappy with the service or product, you can take that up with the seller or service provider separately, but you are still responsible for the financing and payments.
The agreement was a three-way street, but once the product has been sold, or the service provided, it then becomes just you and the finance company dancing together.
The seller or service provider are out of the picture.
Should you stop paying the loan agreement, and it is a loan agreement, the finance company can chase you for payment, and use all the collection tools at their disposal to collect the debt. Yes, it is a debt.
As a consumer if you are not satisfied with the product or service provided, you may have other recourse to settle the dispute, be it legal or through some Ombudsman service, but withholding payment will only damage your credit, and have you chased for payment.