What characterizes a hire purchase agreement?

A hire purchase agreement is characterized by the transfer of ownership of an asset to the buyer upon the completion of all payment installments. This means that the buyer can use the asset during the term of the agreement, but they do not actually own it until the final payment is made. This structure allows individuals or businesses to acquire expensive items, such as vehicles or equipment, without needing to pay the full price upfront.

The arrangement typically involves making an initial deposit followed by regular installment payments, which often include interest. Once the buyer has completed all payments, including any final additional costs specified in the agreement, ownership is officially transferred. This aspect of hire purchase agreements makes them distinct from other types of agreements or leases, where ownership rights may not be conveyed in the same way.