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Accounting · Definition

Hire Purchase

Acquiring an asset by instalments, taking ownership on the final payment.

Under hire purchase the buyer takes possession and use of an asset immediately but pays for it across an agreed term, with legal title transferring only when the last instalment is settled.

Accounting treatment normally recognises the asset and a matching liability from the outset, so depreciation and finance charges are recorded separately rather than treating the instalments as rent.

Also called

  • lease to own
  • instalment purchase

Related terms

Depreciation

Spreading the cost of a fixed asset across its useful life.

Fixed Asset Register

The authoritative list of capital assets with cost, location and depreciation.

Asset Tracking

Monitoring the location, custody and condition of physical assets.

Working Capital

The short-term capital tied up in running the business day to day.

More in Accounting

Accounts Payable (AP) Accounts Receivable (AR) Accrual Accounting Accrued Expense Aging Report Bad Debt Provision Balance Sheet Bank Reconciliation

Hire Purchase is not just a definition here

Accounting runs on this vocabulary every day in AWRA OpsHub — 51 of our 257 glossary terms describe things the platform actually does.

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