Hire purchase
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(HP).
Hire purchase is similar to a finance lease except that it contains a provision giving the hirer an option to acquire legal title to the asset (once certain contract provisions are fulfilled).
A mechanism for gaining the benefits of owning an asset without paying the whole of the purchase price at the outset, but over a period of time.
Relevant accounting standards include IFRS 16 and Section 20 of FRS 102.
