What is HP?

HP stands for hire purchase and this type of loan gives the borrower the chance to buy the goods or equipment while in normal case he wouldn’t have had the money to purchase it. The main idea is that you have the right to use it but the ownership right will be given only after the object has been fully paid for. Whenever this type of purchase is made then the object is being used as collateral. Hire purchases is fixed period installment loan, the owner pays his debt by making profit using the bought equipment. The first time when hire purchase has been used was in agriculture when farmers bought equipment, they had the right to use them but only after they have paid of the total sum then they’ve received the ownership rights as well.