Hire purchase agreements are contract through which a customer enter into a hire purchase arrangement with the hire purchaser for acquiring an asset by paying an initial installment (down payment) and repays the other part of the cost of the asset over a period of time as mentioned in the agreement.
The agreements specifies the terms and conditions of the hire purchase plan. If the buyer defaults in paying the installments, the owner may repossess the goods. It is advantageous to the customers as it spreads the cost of expensive items over a period of time. The agreement should be written as it can be presented in the court of law in case of default by either party to the agreement.
The agreement must be in writing and signed by both the parties.It must clearly lay out description of the goods, cash price of the goods, down payment, monthly installments, the right of the hire to terminate the contract, rights of both the parties, etc.