Difference Between Hire Purchase And Installment System

1. Nature Of Contract

Hire Purchase System: It is a hiring goods agreement.
Installment System: It is an agreement of sale.

2. Ownership

Hire Purchase System: Ownership of goods is transferred after the payment of final installment.
Installment System: Ownership of the goods passes to the buyer just signing the agreement.

3. Right

Hire Purchase System: The buyer can not sell, destroy or transfer the goods.
Installment System: The buyer can sell, destroy or mortgage or transfer as his/her wish.

4. Risk

Hire Purchase System: All the risks are borne by the vendor before the payment of final installment.
Installment System: All the risks are to be borne by the buyer from the date of agreement.

5. Right Of Return

Hire Purchase System: The buyer can return the goods before making the final installment.
Installment System: The buyer can not return the goods to the seller.

6. Repair And Maintenance

Hire Purchase System: The liability of repair and maintenance lies with the seller provided that the buyer takes the utmost good care.
Installment System: The buyer is responsible for repair and maintenance.

7. Forfeiture Of Installment Paid

Hire Purchase System: In case of default in payment of installment, paid installment will be forfeited and treated as hire charges.
Installment System: The act of forfeiture can not be activated.