Now several agencies like National Small Industries Corporation NSIC provide machinery and equipment to small scale units on hire purchase basis and on lease basis.
HP also differs form leasing. Hire-Purchase Hire-purchase is a system of acquiring goods on credit whereby the seller of the goods is regarded as the dealer; the purchaser is regarded as the hirer and the financier as the owner.
HP or leasing is a medium- to long-term solution to support the use of an asset for a certain period of time. What are the problems of repossession?
It does not set down any licensing requirements but provides for the regulation of hire-purchase activities relating to scheduled goods. Therefore, a financier cannot know if a particular machine had been financed by another financier.
The owner then hires the goods to the hirer under a hire-purchase agreement. The lease is usually full pay out; The lease is usually non-pay out, that is the single lease repays the since the lessor expects to lease cost of the asset together with the the same asset over and over again interest.
The hirer has the right to terminate the agreement anytime before taking the title or the ownership of the asset. The hirer absconds. Stolen goods like machinery are difficult for the financier to ascertain.