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    Hire Purchase: Mintu Tom Jose

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    Mintu Tom Jose
    Hire purchase allows a buyer to purchase expensive goods in installments rather than paying the full amount up front. The buyer makes a down payment and then pays the balance off in monthly installments, with ownership transferring after the final payment. Goods are financed by a finance company and leased to the buyer, who pays equal periodic installments over a set period before gaining full ownership. Hire purchase agreements specify the terms, with ownership transferring only after all installments are paid and the buyer unable to terminate early.

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    Hire Purchase: Mintu Tom Jose

    Uploaded by

    Mintu Tom Jose
    27 views11 pages
    Hire purchase allows a buyer to purchase expensive goods in installments rather than paying the full amount up front. The buyer makes a down payment and then pays the balance off in monthly installments, with ownership transferring after the final payment. Goods are financed by a finance company and leased to the buyer, who pays equal periodic installments over a set period before gaining full ownership. Hire purchase agreements specify the terms, with ownership transferring only after all installments are paid and the buyer unable to terminate early.

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    Mintu-H R P M

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    Hire purchase allows a buyer to purchase expensive goods in installments rather than paying the full amount up front. The buyer makes a down payment and then pays the balance off in monthly installments, with ownership transferring after the final payment. Goods are financed by a finance company and leased to the buyer, who pays equal periodic installments over a set period before gaining full ownership. Hire purchase agreements specify the terms, with ownership transferring only after all installments are paid and the buyer unable to terminate early.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    27 views11 pages

    Hire Purchase: Mintu Tom Jose

    Uploaded by

    Mintu Tom Jose
    Hire purchase allows a buyer to purchase expensive goods in installments rather than paying the full amount up front. The buyer makes a down payment and then pays the balance off in monthly installments, with ownership transferring after the final payment. Goods are financed by a finance company and leased to the buyer, who pays equal periodic installments over a set period before gaining full ownership. Hire purchase agreements specify the terms, with ownership transferring only after all installments are paid and the buyer unable to terminate early.

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    You are on page 1of 11

    HIRE PURCHASE

    MINTU TOM JOSE

    Powerpoint Templates
    Page 1
    Hire Purchase

    • Hire purchase is used to buy expensive


    items which a person cannot afford to pay
    outright: e.g. a car

    • A down payment is usually paid and the


    balance is paid over several months
    (monthly installments)

    Powerpoint Templates
    Page 2
    • Goods are let out on finance by a finance
    company to the hire purchaser
    customer
    • Buyer is required to pay an equal
    amount of periodic installments during
    a given period
    • Ownership transfers at the payment of
    the last installment
    Powerpoint Templates
    Page 3
    Hire Purchase Agreement
    • An agreement under which goods are let
    on hire and under which the hirer has an
    option to purchase them in accordance
    with the terms of the agreement.

    Powerpoint Templates
    Page 4
    What Is Hire Purchase

    • Here possession of goods is transferred


    immediately, but payment is made in
    installments. Ownership is transferred
    after all the installments have been paid.

    Powerpoint Templates
    Page 5
    TERMS OF HIRE PURCHASE
    • In hire purchase the purchase has to follow the
    agreement and he cannot terminate the
    contract. The seller can however, terminate the
    agreement in case of default of purchaser

    • hire purchase price is higher than cash price,


    because interest element is added in this price

    Powerpoint Templates
    Page 6
    A
    • A purchases a machine for down payment of
    Rs. 20000 and 3 annual instalments of 20000
    each. Cash price is 74500. show the
    accounting ? Rate of interest 5%

    • 74500 – 20000 = 54500

    interest = 2725
    amount due : 57225
    2nd instalement 20000
    amount due : 37225
    interest = 1861 due = 39086
    3rd instalment : 20000, balance : 19086
    interst (belancing amt) : 914
    last instalment 20000 balance = nil

    Powerpoint Templates
    Page 7
    PROCESS OF HIRE
    PURCHASE
    • The Dealer, contracts with finance co. for financing his
    hire purchase deals.
    • The customer selects the goods for HP, and dealer
    arranges for the complete set of documents.
    • Down payment by customer on completion of proposal
    form.
    • Dealer sends documents to finance co. with request to
    purchase the goods, and accept the HP transaction.
    • The finance co. signs the agreement and sends copy
    along with EMI details to dealer.
    • Dealer delivers the goods to the customer, property
    passes on to the finance co..
    • Hirer pays EMIs, and on last payment , the ownership
    passes on to him, with loan completion certificate by
    the finance co.

    Powerpoint Templates
    Page 8
    Some Business Asset Suitable For
    Hire Purchase

    • - Plant and machinery


    - Business cars
    - Commercial vehicles
    - Agricultural equipment..
    - Hotel equipment
    - Medical and dental equipment
    - Computers, including software packages
    -Office equipment
    Powerpoint Templates
    Page 9
    Guide Lines For Banks As Far As Hire
    Purchase Is Concerned
    • For the present, banks shall not themselves undertake
    directly (i.e, departmentally) the business of hire
    purchase

    • Banks which have set up subsidiaries (i.e, a company


    in which it holds not less than 51% of the shares ) for
    the business of equipment , leasing ,merchant
    banking etc, may undertake the hire purchase
    business either through such a subsidiary or through
    a separate subsidiary.
    Powerpoint Templates
    Page 10
    Conclusion

    Hire purchase is a good


    tool for buying expensive items. So it is
    advisable for most of the customers.

    Powerpoint Templates
    Page 11

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