Differences and similarities between hire purchase and deferred payment - SS2 Commerce Past Questions and Answers - page 1

Ownership of the asset

After completing all payments

Possession of the goods

After a specified period of time

Gradual ownership through installment payments

Hire purchase is a financial arrangement where a buyer acquires an asset by making regular installment payments, gaining possession and use of the asset but not ownership until the final payment is made.

The main difference is that in hire purchase, the buyer does not immediately own the asset and gains ownership only after completing all payments, whereas in deferred payment, the buyer immediately owns the goods or services but defers the payment to a later date.