Question

what is Hire purchase agreement​

Answer 1

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Answer 2

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A hire purchase agreement is a hybrid transaction which starting as an agreement of hire nay culminatr into a sale. The essence of hire-purchase agreement is the right or option to purhcase. Under hire-purchase system, the buyer agrees to pay the price of the goods bought in periodical installments whuch includes both the portion of the cost of goods and interest for deferred payment to acquire the immediate possession for use but the ownership of such goods passes to the buyer only on the payment of the last installment. The installment may be monthly, quarterly, half-yearly or yearly.

The Hire purchase system comes under the Hire Purchase Agreement Act, 1972. There are two parties in the Hire purchase system. One is the buyer who is known as Hire purchaser or Hirer and the other is the saler who is known as Hire saler or Hire vendor. The agreement between the Hire purchaser and Hire saler is called Hire purchase agreement. In this system, the hire purchaser pays a certain amount, known as down payment, to the hire vendor, which is a portion of the cash price of the good on the date of signing the hire purchase agreement and immediately posses the good. The balance amount of the total cash price of the good is paid in installments along with interest after some periodical intervals.