A fifth of people across the UK still owe cash for items they no longer own, new research has found.
According to a survey conducted on behalf of the Debt Advisory Centre, around 12.6 million adults still have active credit agreements that are still in need of paying off.
One of the most common agreements that many people find themselves paying is that of mobile phone contracts, even when they have parted with the product itself.
Some 48 per cent of respondents said they were still paying credit agreements on mobile phones, while car finance (45 per cent), furniture (27 per cent), technology products (24 per cent) and home improvements (14 per cent), were also cited as popular areas for taking out such an arrangement.
Of those that said they had an active mobile phone contract despite no longer owning their handset, nearly half (48 per cent) had upgraded their phone before they had finished paying for their old one.
Another third (37 per cent) said their item broke before they had finished their repayments, while 12 per cent said their phone was no longer useful and needed to be replaced.
There was a similar story for those paying off car finance agreements, with many still paying money despite not owning their car.
Over half (57 per cent) said they had upgraded, while a further 26 per cent said they had bought a new one because their old one broke down.
However, the terms of some credit agreements mean that selling the product in the middle of a contract can be difficult, with hire purchase and conditional sale finance agreements usually stating that products such as cars or furniture remain the property of the lender until the last payment has been cleared.
Indeed, selling a product without the permission of the lender could even be a criminal offence, meaning that people must always check the small print and finer details before entering into such agreements.
In terms of those taking out an agreement for home improvements, around two-fifths (41 per cent) of respondents said they were still paying for furniture despite having replaced them with something better.
Another 24 per cent said their furniture had worn out, while a further 13 per cent said they had sold products they were still paying for.
Ian Williams, spokesman for Debt Advisory Centre, says: “When money is already tight, it’s worrying that one in five people are still paying off items they don’t even own anymore. Not only can this add more pressure to finances that are already stretched, but it might also affect their credit score – especially if they start to miss payments.
“These findings prove why it’s so important to carefully consider whether an item is really needed and how useful it will be before taking out a credit agreement to fund it.”