Lease Purchase

Assists low to moderate income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

Hire purchase (abbreviated HP) is the legal term for a contract, in this persons usually agree to pay for goods in parts or a percentage at a time. It was developed in the United Kingdom and can now be found in China, Japan, Malaysia, India, Australia, and New Zealand. It is also called closed-end leasing. In cases where a buyer cannot afford to pay the asked price for an item of property as a lump sum but can afford to pay a percentage as a deposit, a hire-purchase contract allows the buyer to hire the goods for a monthly rent. When a sum equal to the original full price plus interest has been paid in equal installments, the buyer may then exercise an option to buy the goods at a predetermined price (usually a nominal sum) or return the goods to the owner. In Canada and the United States, a hire purchase is termed an installment plan; other analogous practices are described as closed-end leasing or rent to own. Hire purchase differs from a mortgage and similar forms of lien-secured credit in that the so-called buyer who has the use of the goods is not the legal owner during the term of the hire-purchase contract. If the buyer defaults in paying the installments, the owner may repossess the goods, a vendor protection not available with unsecured-consumer-credit systems. HP is frequently advantageous to consumers because it spreads the cost of expensive items over an extended time period. Business consumers may find the different balance sheet and taxation treatment of hire-purchased goods beneficial to their taxable income. The need for HP is reduced when consumers have collateral or other forms of credit readily available. To be valid, HP agreements must be in writing and signed by both parties. They must clearly set out the following information in a print that all can read without effort:If the seller has the resources and the legal right to sell the goods on credit (which usually depends on a licensing system in most countries), the seller and the owner will be the same person. But most sellers prefer to receive a cash payment immediately. To achieve this, the seller transfers ownership of the goods to a Finance Company, usually at a discounted price, and it is this company that hires and sells the goods to the buyer. This introduction of a third party complicates the transaction. Suppose that the seller makes false claims as to the quality and reliability of the goods that induce the buyer to "buy". In a conventional contract of sale, the seller will be liable to the buyer if these representations prove false. But, in this instance, the seller who makes the representation is not the owner who sells the goods to the buyer only after all the installments have been paid. To combat this, some jurisdictions, including Ireland, make the seller and the finance house jointly and severally liable to answer for breaches of the purchase contract. The extent to which buyers are protected varies from jurisdiction to jurisdiction, but the following are usually present:The hirer usually has the following rights:Basically hirer have following rights- 1-Rights of protection 2-Rights of notice 3-Rights of repossession 4-Rights of Statement 5-Rights of excess amountThe hirer usually has the following obligations:The owner usually has the right to terminate the agreement where the hirer defaults in paying the installments or breaches any of the other terms in the agreement. This entitles the owner:Hire purchases are commonly used by businesses (including companies, partnerships and sole traders) in Australia to fund the purchase of cars, commercial vehicles and other business equipment. Under Australian Taxation Office rules, businesses who account for GST on a accruals basis are entitled to claim an Input Tax Credit for all of the GST contained in the purchase price of the goods on their next Business Activity Statement. Hire purchase is also commonly known as commercial hire purchase and corporate hire purchase (both abbreviated to CHP) in Australia. Hire purchases agreement are commonly known as H. P agreement in Malaysia and it is used by financial institutions in Malaysia to fund the purchase of consumer goods, vehicles and other business equipment and industrial machinery. In Malaysia, The legislation governing the hire purchase transactions is the Hire Purchase Act 1967, which came into force on 11 April 1968 after hire purchase became popular in acquisition of expensive consumer goods such as car, business equipment and industrial machinery. Purchasing car is the most common type of hire purchase agreement in Malaysia and the repayment could served up to 9 years from the date of agreement been executed.