Hire Purchase

Hire Purchase
A method of buying goods through making installment payments over time. The term hire purchase originated in the U.K., and is similar to what are called "rent-to-own" arrangements in the United States. Under a hire purchase contract, the buyer is leasing the goods and does not obtain ownership until the full amount of the contract is paid.

Leasing goods in this manner is a tactic commonly employed by businesses in order to enhance the appearance of earnings metrics. For instance, by leasing assets, it may be possible to keep the debt used to pay for the assets and the asset itself off the balance sheet, resulting in higher operational and return-on-asset figures. In the U.S., consumer rent-to-own arrangements are controversial because they can be used in a way which attempts to circumvent proper accounting standards.


Investment dictionary. . 2012.

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  • Hire purchase — (abbreviated HP) is the legal term for a contract, in this persons usually agree to pay for goods in parts or a percentage at a time. It was developed in the United Kingdom and can now be found in China, Japan, Malaysia, India, South Africa,… …   Wikipedia

  • Hire purchase — Hire purchase, or, more fully, Hire purchase agreement Hire purchase agreement, or Hire and purchase agreement Hire and purchase agreement (Law) A contract (more fully called contract of hire with an option of purchase) in which a person hires… …   The Collaborative International Dictionary of English

  • hire-purchase — a form of purchase under which the purchase price can be paid over an agreed period of time by instalments. During the period the goods purchased remain the property of the seller (or the hire purchase company to whom the seller has assigned his… …   Law dictionary

  • hire purchase —    Hire purchase, commonly abbreviated to HP (called ‘instalment credit’ in the USA, where the system emerged in the nineteenth century) plays an important but decreasing role in providing consumer credit, especially for poorer people, for the… …   Encyclopedia of contemporary British culture

  • hire purchase — n. Brit. INSTALLMENT PLAN * * * …   Universalium

  • hire purchase — n [U] BrE HP a way of buying expensive goods by regularly paying small amounts over a period of time American Equivalent: installment plan …   Dictionary of contemporary English

  • hire purchase — noun uncount BRITISH the INSTALLMENT PLAN …   Usage of the words and phrases in modern English

  • hire purchase — ► NOUN Brit. ▪ a system by which someone pays for a thing in regular instalments while having the use of it …   English terms dictionary

  • hire purchase — n. Brit. INSTALLMENT PLAN …   English World dictionary

  • hire purchase — system for financing the purchase of plant and equipment, where the ownership is vested with the lender until the final payment is made. The borrower is required to place a deposit and make periodic (usually monthly) repayments at a flat rate of… …   Financial and business terms

  • hire purchase — HP A method of buying goods in which the purchaser takes possession of them as soon as an initial instalment of the price (a deposit) has been paid; ownership is obtained when all the agreed number of subsequent instalments have been completed. A …   Accounting dictionary

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