What is hire-purchase?

Hire purchase is a type of installment credit under which the hire purchaser, called the hirer, agrees to take the goods on hire at a stated rental, which is inclusive of the repayment of principal as well as interestwith an option to purchase.


  • Under this transaction, the hire purchaser acquires the property (goods) immediately on signing the hire purchase agreement but the ownership or title of the same is transferred only when the last installment is paid.
  • The hire purchase system is regulated by the Hire Purchase Act 1972.
  • Hire purchase should be distinguished from installment sale wherein title to the property passes to the purchaser with the payment of the first installment itself.

Case Law:


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