The document discusses hire purchase, a system where a person can purchase an asset by making a down payment and paying the remaining balance in installments. There are typically three parties involved - the seller, a financing company, and the hirer/purchaser. The hirer obtains possession of the asset after the down payment but the seller retains ownership until final payment. The hirer makes installment payments over an agreed period and can own the asset outright after the final installment. If payments are missed, the seller can repossess the asset.

1. DEVTECH FINANCE
FINANCIAL SERVICES
HIRE PURCHASE
(MEANING,PROCESS,AGREEMENT
AND PARTIES INVOLVED)

2. HIRE PURCHASE
• INTRODUCTION - Hire Purchase is a system through which a person
hires the asset from seller for a time period by paying installments and
can own the asset once last installment is paid at the end of contract.
There are generally 3 parties involved in the whole hire purchase
transaction.
• HIRE VENDOR / SELLER – One who sells the asset to Hirer.
• FINANCING COMPANY – The link of payment between seller and
purchaser. Pays amount to the seller and accepts installments from hirer.
• HIRE PURCHASER / HIRER – One who purchases the asset from
Vendor.
• OWNERSHIP & POSSESSION - Hirer will immediately get possession
of the asset after making down-payment but ownership will remain with
the seller till the last installment is paid.

3. HIRE PURCHASE
• INSTALLMENT - Through Hire Purchase system, Hirer can make
payment of purchased asset’s price in installment over an agreed
period.
• RETURN OF ASSET – The Hirer has the right to return the asset,
before end of the agreement and stop making future payment.
• TRANSFER OF ASSET – Hirer cannot transfer or sell the asset to
another party until the last installment is made.
• DEFAULT IN PAYMENT – In case the hirer defaults on any installment
payment, the seller is entitled to take away the asset with him.
• ASSET INVOLVED – Car, Bikes, Computer, Electrical Goods, Furniture,
Machinery Equipment, Refrigerator etc.
• DOWNPAYMENT – Generally downpayment ranges between 15 – 20%
of the purchase price.

4. HIRE PURCHASE PROCESS
1. Buyer visits the store and ask seller for hire purchase system to make
purchase of an asset.
2. The dealer contacts the finance co. / bank to finance the hire purchase deal.
3. The buyer/ hirer selects good and expresses desire to purchase on HP basis.
4. The customer then makes the downpayment.

5. HIRE PURCHASE PROCESS
5. The seller sends the document to finance co. / bank.
6. The finance co. decides to accept the offer, verifies and signs the documents
and send back to the seller.
7. The seller then delivers the good to hirer.
8. Hirer starts making payment of installment to finance co.

6. HIRE PURCHASE AGREEMENT
• The asset involved in hire-purchase agreement.
• The retail price and hire purchase price of asset.
• Number of installments and date of each installment.
• Name and addresses of all parties involved in agreement.
• Cost involved – documentation fee, interest, penalty fees.

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FINANCE