NATURE OF HIRE PURCHASE AGREEMENT

NATURE OF HIRE PURCHASE AGREEMENT

• Under the Hire Purchase System, the Hire Purchaser gets possession of the goods at the outset and can use it, while paying for it in instalments over a specified period of time as per the agreement. 
• However, the ownership of the goods remains with the Hire Vendor until the hire purchaser has paid all the instalments. Each instalment paid by the hire purchaser is treated as hire charges for using the asset.
•  In case he fails to pay any of the instalments (even the last one) the hire vendor has the right to take back his goods without compensating the buyer, i.e., the hire vendor is not going to pay back a part or whole of the amount received through instalments till the date of default from the buyer.