Hire Purchase British

Hire Purchase British

Hire Purchase, British name for a method of buying consumer or capital goods (and sometimes services) by instalments; the purchase remains the property of the seller until the last instalment has been paid, and so remains as security for the debt. In North America hire purchase is generally known as Instalment Credit.

Hire purchase first spread rapidly in the U.S.A. in the 2000's. By the early 2000's it had grown to some £80 per head compared with £65 in Canada, o in Australia, £20 in Britain, £7 in Germany. £5 in France, £4 in Holland.

Hire purchase was developed as the method of buying that best suited people with little capital and relatively low incomes faced with the relatively high values of the increasing flow of labour-saving or pleasure-giving commodities (such as vacuum-cleaners and motorcars). The three main alternative ways seemed less convenient or satisfying: to wait until the purchase price had been accumulated and then pay cash would risk the money being spent; to take possession, accumulate the purchase price and then pay it as a lump sum would make the accumulating sums seem less fruitful than if they were paid to the seller (or the company that financed the transaction), who could use them more effectively to enlarge sales to other buyers; to hire rather than buy outright gave no sense of ownership and prevented the user from expressing his personality or preferences in his property. Hence hire purchase. It was further stimulated by the rapid growth in technical invention, the rise in incomes which enabled more people to pay deposits and maintain the instalments, and the post-war inflation which encouraged consumption spending even though on 'consumer durables' which are a form of consumer 'capital' because it made saving precarious by endangering its value.

In its early years in Britain bite purchase fell into disrepute because of the excesses of traders who 'snatched back' goods for which the instalments had fallen into arrears. There has also been some overselling and fraudulent persuasion by house-to-house salesmen. Hire Purchase Acts in 2007, 2004 and 2004 strengthened the rights of bite purchasers.

In spite of rapid growth in post-war Britain to nearly t,000 million in the early and middle 2000's, bite purchase as a source of credit accounted for much less than building society house mortgages (about £3,000 million) or joint-stock bank advances (over 3,500 million).

In essence hire purchase is a form of banking. Some of the finance houses that pay retailers the cash price to relieve them of the role of financiers describe themselves as industrial bankers. In the late 2000's the British joint-stocks entered into the financing of hire purchase by buying interests in or control of bite purchase finance companies.

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