Conditional Sale Agreement

Roman Danaev

25 May 2023

Meaning and Definition

A Conditional Sale Agreement (CSA) is a type of car finance agreement where the borrower agrees to purchase a vehicle under certain conditions. The borrower takes immediate possession and use of the vehicle but only becomes the legal owner after fulfilling the conditions, typically making all the agreed-upon payments.

Why it is important to know

Conditional Sale Agreements outline the terms and conditions of the car finance arrangement, including the purchase price, repayment schedule, interest rates, and any other applicable fees. It is important for borrowers to review and understand the agreement before signing to ensure they are aware of their rights and responsibilities as well as the consequences of default or early termination.

Example in car finance

Suppose a borrower chooses a Conditional Sale Agreement to finance a car purchase. They make an initial deposit and agree to monthly payments over a specified term. The agreement states that ownership of the vehicle will transfer to the borrower once all payments are made. The borrower can use the vehicle during the agreement term, but if they default on the payments, the lender has the right to repossess the vehicle.

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