Hire Purchase Agreement
The hire purchase agreement must contain: -
•Description of goods.
•Price of goods.
•The date of the agreement.
•The number of instalments, amount and the due date of the agreement.
Hire Purchase Process
•Seller sell the goods to the financial company.
•The financial company let goods on hire to the buyer.
•Buyer makes the down payment and takes the possession.
•Then buyer makes all the agreed instalments.
•The ownership is transferred from the financial co. to the buyer at the end
of the agreement.
Advantages of HP System
•Immediate use of the assets without paying the entire amount.
•Expensive assets can be utilized as the payment is spread over a period of
time.
•Fixed rental payments make the budgeting easier as all the expenditures
are known in advance to the buyer.
•Easy accessibility as it is a secured financing.
