Abstract
The General method of selling property is the cash sale. The credit sale system is an alternative method of cash sale. The third system of selling property is the installment system. In an installment system, property is delivered to the buyer immediately but payments are made in periodic installments such as weekly or monthly, quarterly or half-yearly or yearly so on. Hire purchase and installment purchase systems are the major parts of the installment system. However, the hire purchase installment system is the prime concern of this study. With an increasing demand for a better life, the consumption of property has been on the uprising scale. This has not been backed up by adequate purchasing power, transforming it into effectual demand (Mukherjee and Hanif 1998). This has created the market for hire purchase systems. When a person is unable to acquire an asset against immediate cash payment, he may arrange with the vendor to stagger the payment. The financial institution plays the role of facilitator between buyer and seller to enter into the hire purchase agreements. Hire purchase agreement makes it possible for businesspersons, professionals, and others to take advantage of assets all of which enable them to organize and operate their activities effectively. Hire purchase is a system by which a buyer pays for a thing in regular installments while enjoying the use of it. During the repayment period of ownership, the item does not pass to the buyer. Upon the full payment of the hire purchase facility, the title passes to the buyer. Hire purchases can accelerate the pace of growth and development. First, the increase in spending has the effect of increasing the multiplier effect on income in addition to encouraging aggregate investment. Increased income raises the level of expenditure further thus setting in motion a virtuous cycle of growth in consumption, investment, income, and development. Hire purchase also helps to sustain growth by making it possible for the client to resist the downward adjustment of their consumption during a fall in their income. This paper discusses the method of operations made by the hire purchase companies, the client, and economic growth.
Key Words: Hire Purchase, Modus Operandi, Hirer, Hire vendor, Financial Institution.