| Webster's Online Dictionary |
| Expressions | Definition | ||
| Hire purchase | Hire purchase (HP) is the legal term for a conditional sale contract developed in the UK, and now found in India, Australia, New Zealand, and other states which have adopted the English law concept. In cases where a buyer cannot afford to pay the asked price as a lump sum but can afford to pay a percentage as a deposit, the contract allows the buyer to hire the goods for a monthly rent. When a sum equal to the original full price plus interest has been paid in equal installments, the buyer may then exercise an option to buy the goods at a predetermined price (usually a nominal sum) or return the goods to the owner. If the buyer defaults in paying the instalments, the owner can repossess the goods which differentiates HP from other unsecured consumer credit systems and benefits the economy because markets can expand while minimising the seller's exposure to risk of default. Equally, HP is advantageous both to private consumers because it spreads the cost of expensive items over an extended time period, and to certain business consumers in that the balance sheet and taxation treatment of hire purchased goods differs from outright capital purchases. The need for HP is reduced when consumers have collateral or other forms of credit are readily available. (references) | ||
Source: compiled by the editor from various references; see credits. | Top | ||
| Expressions | Domain | Definition | |
| Hire purchase | Business | The sale of goods on terms whereby the purchase price is payable by a fixed number of installments. Source: European Union. (references) | |
| Hire purchase | Finance | A method of buying consumer or capital goods and sometimes services by installments. Source: European Union. (references) | |
Source: compiled by the editor from various references; see credits. | Top | ||
