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Hire Purchase Price

The total sum payable by the hirer under a hire purchase agreement in order to complete the purchase of, or acquisition of property in the goods to which the agreement relates and includes any sum so payable by the hirer under the hire purchase agreement by way of deposit or other initial payment or credited or to be credited to him under such agreement on account of any such deposit or payment whether that sum is to be or has been paid to the owner or to any other person or is to be or has been discharged by payment of money or by transfer or delivery of goods or by any other means but does not include any sum payable as a penalty or as compensation or damages for a breach of the agreement. The hire purchase price should always be higher than the cash price as interest is charged with cash price in case of hire purchase transaction. Thus Hire Purchase Price = Cost Price + Profit Margin + Interest. Net hire purchase means the total of hire purchase price of the goods comprised in hire purchase agreement less any amount payable and specified as included in the hire purchase price:

(a) to cover the expenses of delivering the goods:

(b) to cover registration or other fees under any law in respect of the goods or/and the agreement and

(c) for insurance (other than third party insurance) in respect of the goods.

Net Hire Purchase charges means the difference between the net hire purchase price and net cash price of the goods comprised in the hire purchase agreement.

From the definition of the hire purchase agreement and other terms, the following ingredients should be clearly visible:

(i)    Goods should be let to the hirer;

(ii)    Goods should be delivered by the owner on condition that such hirer should pay the agreed amount in periodical installment;

(iii)    The hirer should have made payment of option amount;

(iv)    The hirer should have been given the power to exercise the option to purchase the hired asset an appropriate time;

(v)    The property in goods is to pass to such person on the payment of the last installment and exercising the option conferred upon him under the agreement and

(vi)    Such a person has a right to terminate the agreement at any time before the property so passes.

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