Hire purchase can be defined as a contract in which the buyer acquires the possession of the goods immediately and agrees to pay the total cost in installment where each installment is treated as hire charges. The ownership of goods is transferred to the buyer from seller only when the last Installment is paid. Here is the list of features of hire purchases –
1. Under hire purchase agreement the hire seller transfers possession of goods immediately to the purchaser.
2. The Buyer agrees to make payment in Installment over a period of time.
3. The Ownership of the goods will remain with the seller until the payment of the last Installment.
4. The hire purchaser generally makes a down payment on signing the agreement.
5. If the purchaser of the goods default even the last Installment, the hire seller has the right to takes the goods back without making any compensation to the buyer of goods.