Hire purchase(frequently abbreviated to HP) is the legal term for a contract, in cases where a buyer cannot afford to pay the asked price for an item of property as a lump sum but can afford to pay a percentage as a deposit, a hire-purchase 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.
There are several limitations of hire purchase business. The main limitation is that you do not have full ownership of the item until you clear the payments.
Hire purchase was first put into regular public service in the 1850's by Edward Clark, partner to Isaac Merritt Singer. This allowed for the Hire Purchase of Singers new sewing machine that cost $125 in the 1850's. You could pay in weekly or monthly installments at agreed amounts to suit your purse. His hire purchase method was widely copied throughout the world.
hire purchase system
Hire purchase(frequently abbreviated to HP) is the legal term for a contract, in cases where a buyer cannot afford to pay the asked price for an item of property as a lump sum but can afford to pay a percentage as a deposit, a hire-purchase 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.
In a hire purchase agreement, the settlement of the loan involves two key entries in the accounting records. First, when a payment is made, a debit entry is recorded to the hire purchase liability account to reduce the outstanding loan balance. Simultaneously, a credit entry is made to cash or bank to reflect the outflow of funds. Additionally, if there are interest charges, these would also be recorded as an expense, creating another debit entry to the interest expense account.
origin and development of hire purchase
Hire purchase can give the good profit,
One advantage of hire process is that it allows low-income individuals to purchase items that would otherwise be out of their budget. Hire purchase is also known as installment plan.
If a company fails to make it's repayment under the hire purchase agreement then the loan providers can tale the goods bought under the hire purchase as settlement for the loan.
The legal term for hire purchase is a contract. Companies may prefer using hire purchase because it spreads the costs of expensive items over a period of time.
higher purchase
caluculation of intrest under hire purchase system
Hire Purchase
Paying in instalments
The verb to hire has the participle adjectives hiring and hired. For the noun hire, it can be used as a noun adjunct (hire car, hire purchase).
No, hire purchase is generally considered a form of secured debt. In a hire purchase agreement, the item being financed acts as collateral, meaning the lender can reclaim it if the borrower fails to make payments. This security for the lender distinguishes hire purchase from unsecured debt, where there is no collateral backing the loan.
someone answer it!