Hire Purchase, Credit Sales And Rental Agreement

This article deals with the features of Hire Purchase and the differentiation between Hire Purchase, Credit Sale and Rental Agreement:-

Features of Hire Purchase

When goods are purchased under a Hire Purchase Agreement:

• Vendor of the goods leases the asset to the purchaser on the terms that the purchaser shall pay to the vendor hire charges equivalent to the cash purchase price plus interest on the outstanding balance.
• The legal title to the assets does not pass to the purchaser until he has paid his final installment and exercise his option to purchase

• On default of payment, the vendor can reclaim/repossess the asset subject to certain clauses of the Hire Purchase Acts?

Credit Sales Agreement:-

Here, the legal title of the goods passes to the purchaser immediately on delivery and the purchase price is payable by installments. In the eve

Rental Agreement:-

The legal title to the goods remains with the vendor and for as long as the customer possess the goods, he has to pay a rental charge.