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A Hire Purchase Agreement is a contract between the owner of equipment and someone who’s hiring the equipment and will eventually own it (after paying regular fixed payments).
Upon making the final payment, ownership of the equipment will transfer to the hiree. Examples include hiring out work equipment, sports equipment or vehicles.
Hire Purchase Agreements are useful for customers who can’t afford equipment outright but would benefit from its use straight away, and for business owners who want to receive regular incoming payments in the meantime.
For example, a cafe that has just started up with a limited budget might hire an espresso machine with the intent to purchase it once all payments have been made.
It’s important to formalise this arrangement so that ownership is properly recognised as transferring once certain terms are met. This is where a Hire Purchase Agreement comes into play.
What Is Included In A Hire Purchase Agreement?
Hire Purchase Agreements include details on the following:
- Description of goods
- Payment schedule
- Customer obligations
- Liability
- Term of hire and date of purchase
- Damaged goods before purchase
- Dispute resolution
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