Distinction of “hire purchase” and “credit sale”

Distinguish between “Hire purchase” and “Credit sale”

Distinction of “hire purchase” and “credit sale”

  • Hire purchase (HP) is an agreement of hire, whereas credit sales are an agreement of sale.
  • Ownership of goods is transferred from hire vendor to hire purchaser only when the last installment is paid, but in sales, ownership is transferred immediately to the buyer.
  • Price is paid by the hire purchaser through installment which is treated as hire, but in sales price is paid in lump sum or according to the agreement of sale.
  • The hire vendor can repossess the goods on default but in sales the seller cannot take back the goods, whatever is the case.



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