Hire Purchase

Formal

Old-fashioned term for the raising of a loan against some form of semi-permanent security - the most common being for an individual to buy a car. Repayment of the loan is by a number of instalments with ownership of the security passing once payments are completed. Default early and the asset may be re-possessed.

Real-world Example

Someone buys a $20,000 van by paying a deposit plus monthly instalments over 4 years, becoming the legal owner only once the final payment is made - a hire purchase agreement.