Hire purchase

Hire purchaseDEFINITION OF HIRE PURCHASE HP is a legal term for a contract or an agreement, where the agreement includes a letting of goods with an option to purchase and an agreement for the purchase of the goods by instalments.

PARTIES INVOLVEDFinancier/BankCustomersDealers

TYPES OF GOODS FINANCEDPrivate carPrivate home appliancesBusiness equipmentOffice machinery

HP TRANSACTION

HP AgreementDescription of goodsTime periodNumber of instalments and when to payAmounts of instalmentsTo who and the place to payThe address where the goods locatedCash price of goodsHire purchase priceDeposit amountHP AgreementA reasonably comprehensive statement of the parties rightThe right of hirer to terminate contractA guarantorInsurance coverageThe hirer has to:To pay hire instalmentsTo pay overdue instalmentsTo take care of the goodsTo inform owner where the goods will be keptA hirer can sell the goods when he has purchased the goods.The owner has the right:To forfeit the depositTo retain the instalments which has been paidTo repossess the goodsTo claim damages for any loss suffered

9COMPUTATION OF HIRE PURCHASEINTEREST RATE / TERM CHARGES

MONTHLY RENTAL PAYMENT / INSTALMENTS

STATUTORY REBATE (SR)

RM45,000 x (48) (48+1)/(60) (60+1) = RM28,918.10statutory rebate for term charges he is entitled is:RM 16081.90SAVE 15ANNUAL PERCENTAGE RATE (APR)

ISLAMIC CONCEPTAL IJARAH THUMMA AL BAI

ADV & DISADVADVANTAGESCONVINIENCED IN PAYMENTINCREASED VOLUME OF SALESINCREASED PROFITENCOURAGED SAVINGSHELPFUL FOR SMALL TRADERSEARNING OF INTERESTLESSER RISK

DISADVANTAGESHIGHER PRICEARTIFICIAL DEMANDHEAVY RISKDIFFICULTIES IN RECOVERY OF INSTALMENTSBREAK UP OF FAMILIES

REFERENCESwww.bankinginfo.com.my/02_know_your_products/0202_applying_for_loan/hire_purchase.phpwww.rhb.com.my/loans/hire-purchase/hp_hire_main.htmlhttp://www.ask.com/business-finance/types-hire-purchases-a183ac0c3f79e5d0#http://www.akpk.org.my/learning/articles-and-tips/id/223/hire-purchase-loanhttp://www.tradingstandards.gov.uk/cgi-bin/brighton-hove/con1item.cgi?file=*adv0030-1011.txthttp://www.calculator.com.my/car-loan#.VSibhvmUdCohttp://credit.about.com/od/glossary/g/apr.htm?utm_term=annual%20percentage%20rate&utm_content=p1-main-1-title&utm_medium=sem&utm_source=msn&utm_campaign=adid-199d47ef-9829-49d8-9031-e1e7286076f9-0-ab_msp_ocode-4609&ad=semD&an=msn_s&am=phrase&q=annual%20percentage%20rate&dqi=&o=4609&l=sem&qsrc=999&askid=199d47ef-9829-49d8-9031-e1e7286076f9-0-ab_msphttp://www.efinancemanagement.com/sources-of-finance/difference-between-lease-financing-vs-hire-purchasehttp://www.yourarticlelibrary.com/stores/hire-purchase-system-its-advantages-and-disadvantages/25917/