Characteristics of the hire purchase agreement

the following are the main characteristics of a hire purchase agreement

  • A down payment called a deposit is made first
  • followed by the fixed installments at regular intervals

  • payments are made in a specified period of time
  • the buyer then takes possession of the goods
  • the buyer does not become the owner of the goods
  • the buyer becomes the owner after paying the last installment
  • item bought may not be sold until the payment is completed
  • Legally the item bought remains the property of the seller until the last payment (installment).
  • the seller can repossess the item if the buyer defaults(fails to pay)

  • it is suitable for selling durable goods such as furniture, stoves, refrigerators