HIRE PURCHASE VS LEASING
▪ one party can use the asset of the
other party for the payment of
equal monthly installments.
▪ No specific accounting standard
▪ A down payment is required in
hire purchasing.
▪ The installments are provided in
principal plus interest format
• one party buys the asset and
allows the other party to use it by
paying consideration over a
specified period is known as
Leasing.
• Accounting standard is AS-19
• There is no down payment
required in leasing.
• The installments are provided on
the basis of the cost of using an
asset.
 HIRE PURCHASE VS LEASING
▪ The ownership of the product is • The transfer of ownership depends
transferred from the seller to the upon the type of lease one is taking.
purchaser once the last installment is
paid.
▪ The repairing and maintenance of the • The repairing and maintenance of a
product/ good depend upon the product/ good depend upon the
buyer. lease type.

▪ Initial payment along with installment • The lease rentals are provided in
is provided in hire purchase. leasing.

▪ Hire purchasing is of short-term • Leasing is of a longer duration.

duration.
• Example- Cars, Truck, Lorry, Smart • Example- Land, Property, Building,
Phone Equipment