Hire Purchase (HP)

Hire purchase (HP), also known as an installment plan, is a financing option for acquiring an asset. Here’s a breakdown:

  • Down payment – You pay an initial amount upfront, typically a percentage of the total cost.
  • Installment payments – You spread out the remaining cost plus interest in regular payments over a set period.
  • Ownership – Importantly, you don’t legally own the asset until all payments are complete.

Think of it like gradually renting an item with the option to buy it at the end. It’s commonly used for expensive goods, allowing you to access them sooner while managing the cost.