HIRE PURCHASES

Meaning Of Hire Purchases It is a method of selling goods. In Hire Purchase (H.P) transaction the goods are let out on hire by a finance company. The buyer is required to pay an agreed amount in periodical installments during a given period. The ownership of the property remains with creditor and passes on to hirer on the payment of last installment .

HISTORY OF H.P The growth and development of H.P system can be traced back to the advent of industrial development in the U.K Henry Moore, a piano maker introduced H.P system in 1846 in the U.K Cowperwait & Sons, a furniture dealer introduced H.P system in U.S.A in 1807. Earlier all H.P transactions were financed by manufacturers or dealers themselves. Later, independent finance house came into existence In India , H.P finance started only after World War I. The concept of H.P was not quite popular in the pre- independence period.

Wide variety of consumer articles, automobiles and industrial machinery were offered on H.P Apart from consumer vehicles, purchase of consumer articles such as household appliance, air conditioners, refrigerators, office furniture and equipment is financed presently through hire purchase. The Indian H.P market is registering a staggering growth rate of around 20 percent per annum.

H.P. INSTITUTIONS The Institutions engaged in the H.P business in organized sector include Commercial Banks Co-operative Banks State Financial Corporations National Small Industries Corporations In the unorganized sector comprises of large number of partnership firms and Individuals.

FEATURES OF HIRE PURCHASE Buyer takes possession of goods immediately and agrees to pay total price in installments. Each installment is treated as hire charges The ownership of goods passes from the seller to the buyer on the payment of the installment

If buyer makes default in the payment of any installment, the seller has right to repossess the goods from the buyer and forfeit the amount already received treating it as hire charged. The hirer has right to terminate the agreement any time before the property passes