Hire Puchase
Hire Puchase
Hire Puchase
Hire Purchase
Hire purchase is the mode of financing the price of the
goods to be sold on future date. In a hire purchase
transaction, the goods are let on hire, the purchase price is
to be paid in instalments and hirer is allowed an option to
purchase the goods by paying all the instalments.
Example: Pay full price of say, Rs. 5lac and take the delivery
of car, as against the Car purchased with bank finance with
hypothecation charge registered. Any item purchsed under
Hire-purchase or Instalment purchase is not an outright
purchase.
Problems in Outright purchase
High initial cost -affect cash-flow
Technology obsolescence
Maintenance & repair cost
wont be able to take advantage of the tax
benefits [like lease rental and loan interest
payment]
Hire purchase problem