Home  /  Corporate Finance  /  Leasing  /  Hire Purchase Arrangement

Hire Purchase Agreement


Overview of Hire Purchase Agreement
The hire purchase agreement is one of the main constituent parts of a lease. With an increasing number of companies opting to lease instead of buying assets for business related purposes, the hire purchase agreement is becoming more important than ever before.

Features of Hire Purchase Agreements
  • The entire interest that is accumulated by the hiree is distributed. This distribution is done on the basis of method sum of the years digits.
  • The counterpart of the lessor or the hiree buys a particular property. He then provides the hirer or the counterpart of the lessor the property on a rental basis.
  • The hiree usually takes a flat rate of interest. This means that a specified portion of the interest rate is calculated on the basis of the investment made at the beginning by the hirer. The figure is normally around 14 percent. The interest rate is not taken on the basis of diminishing balance.
  • The hirer is supposed to pay the hiree a certain number of installments at time periods that are fixed. These installments are supposed to account for the payment of the principal as well as the interest. At the time when the final installment is paid by the hirer the ownership of the asset is transferred to him.


More Information Related to Corporate Finance
Business Valuation Hybrid Financing
Capital Budgeting Investment Decision
Corporate Cash Flow Corporate Leasing
Corporate Financing Concepts Corporate Finance Management
Risk Analysis Corporate Finance Accounting
Corporate Finance Advisory Corporate Finance Consulting
Corporate Finance Statements Corporate Tax
Corporate Finance journal Online Corporate Financing


Last Updated on : 27th June 2013

About Us // Terms & Copyright // Disclamer // Privacy Policy // Surfing Agreement // Feedback // Sitemap

© copyright 2013-2014 finance.mapsofworld, ALL RIGHTS RESERVED
Compare Infobase Limited