Hire Purchase loan is a contract where the lender (the owner) allows the hirer the right to possess and use an item of equipment in return for regular payments. Once the last payment has been made, the title of the asset is transferred to the hirer. Hire Purchase Loans are handy for buying assets such as vehicles, equipment, machinery and office equipment.
Types Of Assets That Can Be Purchased On Hire Purchase
- Hire purchase can be used to buy motor vehicles, computers, industrial machinery, equipment and furniture.
- They are generally used for fixed assets i.e. assets that cannot be easily converted into cash.
What Are Hire Purchase Loans
- A hire purchase loan is another way to finance purchasing of fixed assets.
- You basically buy an item on hire purchase - you make regular payments for the asset over a fixed period of time.
- Only when all the payments are made does the asset belong to you. Before that, the asset belongs to the seller.
- To finance your monthly repayments, you can take out a loan. This is a hire purchase loan.
Hire Purchase Loans Offered By The Singapore Government
The Singapore Government enacted the Hire Purchase Act in 1969, towards promoting Hire Purchase schemes. In order to create a pro enterprise business environment, the Government has taken initiatives in moving away from rigid rules that block innovation to promoting greater disclosure and transparency. With greater maturity in the financial markets and increased awareness among the people, the Government felt the need to review the Hire Purchase Act. As a result the Hire Purchase Act was amended on 1st November 2004.
The Amendment provides in detail to potential hirers the financial obligations arising, in particular:
- The method of calculating the loan balance upon early settlement
- Effective interest rate charged by owners
- Interest rate for overdue installments and
- Administrative charges, if any
Hire Purchase Loans In Singapore
Micro Loan Programme
Micro Loan programme is for small businesses. They can avail of fixed interest loans of up to S$100,000.Any enterprise registered or incorporated in Singapore, having between 30% to 100% of shareholders as residents of Singapore and having up to 10 employees. In addition the group fixed assets must be up to 15 million.
Micro Loan programme is for small businesses. They can avail of fixed interest loans of up to S$100,000.Any enterprise registered or incorporated in Singapore, having between 30% to 100% of shareholders as residents of Singapore and having up to 10 employees. In addition the group fixed assets must be up to 15 million.
