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Hire Purchase

Meaning: 

Hire Purchase (HP) is a financial arrangement that allows individuals or businesses to buy goods by making payments in installments. The buyer receives the product  immediately, but ownership is only transferred after the final payment is made. Essentially, you hire the product now, pay gradually, and become the owner after full payment.

Example:

For instance, if someone buys a car through a hire purchase agreement, they make monthly payments until the car is fully paid off, at which point they own it.

How to understand Hire Purchase :

Hire purchase makes expensive goods more affordable by allowing consumers to spread payments over time.
It is particularly useful for businesses looking to acquire equipment without paying the full amount upfront.


Uses of Hire Purchase: 

It is commonly used for purchasing vehicles, household goods, business equipment, and agricultural machinery.


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