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Glossary Term

Conditional Sales Contract

You use the equipment right away; the lender holds title until the last payment.

All glossary terms

In short

A conditional sales contract is a financing agreement where you take possession and use of the equipment immediately, but the lender retains legal title until you make the final payment. Once the balance is cleared, title transfers to you.

How it works

You get full use of the asset from day one, while ownership on paper stays with the lender as security:

  • You take delivery and use of the equipment right away.
  • The lender holds title as security until the debt is fully repaid.
  • You make scheduled payments over the agreed term.
  • On the final payment, title transfers and the asset is yours.

Where you'll see it

Conditional sales contracts are common for commercial vehicles and equipment. They function much like an equipment finance agreement — you're buying the asset over time — with the distinction that title formally passes only at the end. It's a straightforward path to ownership without a large up-front purchase.

Common questions

Do I own the equipment during the contract?

You have full use and possession, but legal title stays with the lender until the final payment clears. Then ownership transfers to you.

How is this different from an equipment finance agreement?

They're very similar ownership-focused structures. The main nuance is when title passes — a conditional sales contract holds title with the lender until the end.

General information only. This page is educational and does not constitute financial, legal, or tax advice. All financing is subject to credit review and lender approval. Rates, terms, and eligibility vary by applicant, asset, and lender, and are not guaranteed. Any figures or examples are illustrative. Please speak with a qualified advisor about your specific situation.