The hire purchase means that you hire an item with an intention to purchase later. The principle followed is simple. First the basic price is fixed. Interest is added up with it in consideration of number of months it will prolong. This amount is then distributed among the number of months equally. In any moment if the lessee prefers to discontinue they can walk away. What he loses is the amount paid. If he is able to complete the full payment cycle he gets the property.
However we find it different when the word Leasing is used. Here first after the final payment is made a resale value is fixed and exchanged. In case the lessee fails to pay there is a penalty clause attached.
At this time of recession when jobs are not guaranteed I feel that Hire Purchase method should be introduced which will enable people to go to take risk of acquiring assets. The new entries in the job market will feel it more useful.
By encouraging this the government will also find more revenue generating as well as companies hard hit by recession will be able to keep the income cycle moving.
