HIRE PURCHASE AND INSTALLMENT PAYMENT
Definition: Hire purchase can be defined as a system by which one pays for a thing in regular
installments while having the use of it. Hire purchase can also be define as a system of acquiring
property in which the hirer is in possession of the assets or property until payment is fully made.
Installment payment-installment payment can be refer to a customer paying a bill in small portions
throughout a fixed period of time is an agreement plan between the buyer and the seller and is clearly
stated in the payment terms of contract or in the invoice used.
Types of goods in hire purchase; they are consumer’s goods and industrial goods.
Terminologies used in hire purchase:
1. Hire Seller/hire vendor.
2. Hirer/hire purchase/hire buyer
3. Cash price/cash value
4. Down payment
5. Hire purchase price.
6. Hire purchase charge.
7. Finance house.
8. Interest on hire purchase.
9. Install mental payment. Installment.
Explanation OF THE FOLLOWINS
1. Hire seller/ hire vendor: these are persons who delivered the goods to the hirer with the
intention to sell the goods under the hire purchase agreement.
2. Hirer/hire purchase / hire buyer: this is an individual or organization who purchases goods
by paying installments.
3. Cash price / cash value: the cash price or value is the price paid or received for immediate
delivering of goods or assets purchased.
4. Down payments: A down payment is refer to the initial sum of money applied to a purchase
being financed by the purchaser. Any amount ahead of goods is down payment.
5. Hire purchase price: This means the total sum payable by the hirer under a hire purchase
agreement.
6. Hire purchase charge: This is the total amount you will pay over the assets for the period
allocated to it, is also the monthly payment made by the hirer times the number of months
before the payment is complete.
7. Finance house: Finance house is not a bank but are company which their primary
assignment is to provides money for hire purchase either for company or individual who
meet their obligations.
8. Interest on hire purchase: interest is the amount charge on the outstanding owed by the
hirer under the hire purchase agreement.
9. Install mental payment: This is where the hirer is pay his bill in small portions throughout
the fixed period of time.
Installment: this an amount as one of several equal payments for
something spread over an agreed period of time
Operations of hire purchase: the goods are delivered to the hirer in which he has agreed to
made a periodical install mental payment. The hirer must not sell the goods until full payment is
made but he/she can be in possession of the goods while the seller remains the owner of the
goods until full payment is made.
Four aspect of hire purchase are as follows:
1. Treatment in the book of the buyer of large items.
2. Treatment in the book of buyer of larger items.
3. Treatment in the book of seller of larger items.
4. Treatment in the book of finance companies.
