What is leasing and hire purchase?
There is no precise definition of what constitutes the practice of "leasing". However, the term is generally understood to mean a contract of bailment, whereby one party, the "lessee", obtains the use of an asset from its legal and beneficial owner, the "lessor", for a period of time, the "lease term", in consideration for periodic "lease payments".
Hire purchase involves an arrangement whereby one party, the "hirer", is granted the use of an asset over a period by the owner of the asset, the "seller", in return for periodic "instalment payments", at the end of which the hirer either has the obligation or right to purchase the asset for a "final payment". The amount of each instalment payment, together with the final payment, will generally equate to the original cost of the asset plus the cost to the seller of financing the assets over the hire purchase period.
For further information contact us and/or view our original eNewsletter here.