If you are looking to finance a used car, you may have encountered different types of financing options including conditional sale agreements.

This can often throw up more questions than answers and you might be thinking, what is conditional sale car finance and what does it involve?

In this guide, we’ll take a closer look at CS finance and how it works, helping you to make an informed decision.


What is CS car finance?

Conditional sale car finance agreements allow you to spread the cost of new and used vehicles over a set time period agreed with the lender.

Conditional sale agreements are similar to hire purchase agreements because you don’t own the car until you have paid off the agreement.

However, with a CS agreement, you will automatically become the legal owner of the car once all of the payments have been made without having to pay any additional fees.

How does a Conditional Sale agreement work?

When taking out a conditional sale agreement, you’ll begin by paying an initial deposit. The deposit is usually around 10% of the vehicle’s price.

However, the amount you put down will dictate the costs of your future monthly payments. A bigger deposit will reduce your monthly payment amount and vice versa so it is worth considering your options here.

The monthly payments will then be spread over an agreed term which can typically range between two or three years with some agreements extending up to five years.

Once you come to the end of your term and all your monthly payments have been made, you will become the legal owner of the car without having to pay any additional fees.


What are the advantages of a Conditional Sale agreement?

Buying a new or used vehicle outright can be costly. One of the biggest advantages of a CS agreement is that it allows you to spread the cost of a vehicle over a certain time frame rather than paying for it outright.

CS agreements offer flexible payment periods that can range anywhere from 1 – 5 years. Because CS agreements can be used to finance used cars, this gives you a greater choice of vehicles and options to suit a range of budgets.

Unlike an HP agreement, there is no “option to purchase” fee at the end of the agreement. Instead, the car will legally be yours once all the monthly instalments have been paid.


What should I consider before taking out a Conditional Sale agreement?

Credit Score Impact

Like any type of used car finance, there are some things you should consider before taking out a CS agreement.

Failure to keep up with repayments could damage your credit score and in worse cases, the vehicle could be repossessed. This can make getting loans in the future more challenging.


During the term of the CS agreement, you are not the legal owner of the car. Whilst this might suit some, you won’t be able to modify or sell the vehicle without permission from the lender.

Monthly finance costs

Like HP instalments, CS instalments are typically higher than PCP instalments. This is because CS agreements take into account the full value of the car rather than the expected depreciation of the vehicle.

Ownership of the vehicle

If you have no intention of owning the car at the end of the agreement, PCP finance could be a better option for you.


Related Articles and Advice