Hire Purchase, often known by the abbreviation H.P is a British invention. The idea is that a customer who wants to purchase equipment but cannot afford the full price, pays a deposit and agrees to rent (or hire) the equipment for a monthy amount. When the monthly payments reach the price of the item, the customer can then pay a nominal fee plus interest on the item(s) and own the equipment outright, or they can return the equipment to the seller. In the United States, this system is referred to as 'Rent to Own'.

For a Hire Purchase agreement to be legally binding as an agreement, it must be properly formatted and typed out, with a signature and date from both parties on the agreement. There can be no small print in this type of agreement. All details of the contract should be clearly shown on the arrangement. The details that should be clearly viewable include: a description of the goods, the Hire Purchase price - the sum payable to hire and then to own the goods outright, the original cash price of the goods, the amount of the deposit, what monthly payments must be made and what interest rate will be charged and the full rights of both parties with regard to the Hire Purchase contract agreement.

If the dealer offers you a piece of equipment and it is in any way faulty, you can appeal to them under Section 56 of the Credit Consumer Act. You may need to take this to court, but if the equipment is clearly faulty, you are more likely to win in the small claims court. On the other hand, if the equipment can be repaired, you can offer the dealer the opportunity to lend you a working piece of equipment whilst they repair yours or you can reasonably withhold the amount it costs you to repair the piece of equipment for yourself.

Remember that you can't sell any goods until they are paid for. Your creditor or dealer can demand that you return the goods to them immediately if you don't keep you up your payments to them.

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