KEYTAKEAWAYS
Explore Hire-Purchase, a method where an initial deposit allows gradual ownership of goods through installment payments, combining usage and acquisition.
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Definition
Hire-Purchase – A Purchasing Agreement with Gradual Ownership Transfer
Hire-purchase, also known as a hire-purchase agreement, is a contractual arrangement that allows individuals to acquire a good with an initial deposit, followed by periodic rental payments that include both the purchase price and interest charges. This method of acquisition enables the buyer to use the item immediately while paying for it in installments.
Throughout the hire-purchase term, the purchaser gradually gains equity in the item as payments are made. Upon completing the stipulated payments, ownership of the good is transferred from the seller to the purchaser, cementing their full ownership rights.
Understanding hire-purchase is essential for individuals seeking a flexible and structured approach to acquiring assets without the need for substantial upfront payments. This method provides an alternative to outright purchases, particularly in cases where immediate ownership is not feasible.
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