Hire purchase is a method used by a lot of business firms and individuals to purchase plants, machinery, or equipment on an installment basis. The hirer purchases and equipment make the payment on an installment basis with a fixed rate of interest. The interest rate is decided before the signing of the contract by the hirer and the hiree. Once the hirer makes his last payment, he becomes the owner of the equipment. You can buy a car on hire purchase from Capitall Singapore.
DIFFERENCE BETWEEN PURCHASE AND HIRE PURCHASE: There is a vast difference between purchase and hire purchase. Below mentioned are a few points which will help you know the difference between them.
|The purchase happens in one shot
|It takes year to purchase a car
|The payment is made in one shot
|The payment is made in installments
|The procedure completes within no time
|It usually takes years to complete
|No need to pay interest
|The hirer pays interest on every installment
|The ownership is given to the purchaser at the time of making payment
|The ownership is given to the hirer when is makes his last installment payment
|The purchaser is the sole owner of the car
|The hirer can lose the car on nonpayment of installments
|The purchaser can sell the car to anyone
|The hirer cannot sell the car to a third party since the ownership is in the hands of hiree
|Can do anything with the car
|Has to maintain the car without causing any damage to it
|The purchaser is liable to no one
|The hirer is liable to the hiree
FREQUENTLY ASK QUESTIONS ABOUT HIRE PURCHASE SINGAPORE
- WHAT CATEGORIES OF HIRE PURCHASE COMES UNDER THE LAW?
The law Singapore categorize hire purchase into different categories. It constitutes plants, machinery, and other fixed assets. It also includes automobiles for commercial purposes and non-commercial purposes.
- HOW A RENTAL AGREEMENT DIFFERS FROM HIRE PURCHASE?
In hire purchase, the hirer purchases the car for a lifetime. Upon completing the last payment, he becomes the car owner, and the vehicle remains with him forever. This is basically a purchase made on an installment basis. Whereas in the rental agreement, the higher rents the car for a particular period of time. He pays the rent to the hiree for using his car. The hirer doesn’t become the car owner since he has hired the car on a rental basis. The hirer returns the vehicle once the rental agreement gets over.
- CAN I USE MY CAR FOR PRIVATE AS WELL AS COMMERCIAL PURPOSE?
There is a vast difference between a commercial car and a private car. A commercial vehicle is used to earn money, which is registered under the government’s commercial automobile act law. When you’re using a vehicle for your personal use, you purchase the car which gets registered under the personal automobile of the government. Thus, the registered commercial vehicle should be used only for commercial purposes since it is registered under the law’s commercial activities.
- CAN I PURCHASE A CAR FOR RENTAL AGREEMENT AND THEN CONVERT THE CONTRACT INTO HIRE PURCHASE?
This entirely depends on the decision of the owner of the car. Yes, converting your rental agreement into a hire purchase is possible. To do so, first, try to complete the tenure of your rental agreement. Once the rental agreement contract is complete, take the purchase proposal to the hiree. If the hai re is interested in selling his car on hire purchase, then you can easily convert the contract into hire purchase. The decision lies entirely in the hands of the hiree.
- CAN I DECREASE THE TENURE OF MY HIRE PURCHASE?
This is entirely possible. Decreasing your higher purchased tenure means you want to make the payment as soon as possible and get the ownership in your hand. By doing this, you changed no law the criteria of agreement. As a hirer, you make the complete hire purchase payment along with interest in one shot and become the owner of the car. The hiree will have no objection to this since he is getting the amount at the earlier date. This proves to be beneficial both to the hirer as well as the hiree.
PROS OF HIRE PURCHASE
- You can purchase your favorite car and get the keys in hand only by paying some advance amount.
- There is no need to pay the whole amount together. The payment is divided into different installments.
- The interest rate is quite low.
- The burden of payment is reduced since the tenure of the agreement last for years.
- You can immediately start using the car without oven paying the whole amount.
CONS OF HIRE PURCHASE
- The ownership of the car is not given to the hirer until he makes us last payment.
- Due to the long tenure of the agreement the hirer has to wait for your ears to get the ownership
- The hirer has to pay an extra amount on the actual rate in the form of interest. The interest rate is decided by the hiree, depending on the hire purchase agreement.
- The hiree cannot resell the car to a third party.
- Since the owner is not in the hands of the hirer, he cannot cause single damage to the car.
WHAT HAPPENS WHEN THE HIRER FAILS TO MAKE THE PAYMENT?
The hire purchase agreement is wholly based on the installment payment. The hirer can acquire the car from the hiree and start using it. To complete the contract of hire purchase, the hirer has to make an advance payment. Once the advance payment is made, the hire’s remaining fee is paid on an installment basis.
The installment amount needs to be paid along with the interest rate. When the hirer fails to pay the installments, the hiree has the complete right to take back his car from the hirer. Thus the payments made in the installment are not returned by the hirer due to breach of contract.