A hire purchase contract is an agreement to allow the use of an asset while instalment payments are made, prior to a final payment which allows title in the goods to pass to the buyer. Hire purchase may be used instead of outright purchase where the buyer wants the benefits of usage but does not want to make the initial outlay for outright acquisition. Instead, the buyer pays regular payments which act as rental payments, covering the cost of the asset, the interest accrued and the supplier’s profit. When the total sum has been paid, the buyer may then buy the asset at a nominal sum or return the asset to the supplier. See also Contract, Hire.

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