Lease vis-à-vis Hire Purchase. Difference between lease/leasing and hire purchase. What are the difference between lease/leasing and hire purchase ?

Generally, after studying lease/leasing and hire purchase, one question may arise in our mind that what is the difference between lease/leasing and hire purchase. I am trying to differentiate lease/leasing and hire purchase.

The hire-purchase contract is also nearly alike to a lease/leasing contract with the simple difference that the person using the asset on hire-purchase basis is the titleholder of the asset and full title of the asset is transferred to him after he has paid the agreed installments of hire purchase deed. The asset will be shown on his balance sheet and he can claim depreciation and other allowances on the asset for computation of tax during the currency of hire-purchase agreement and thereafter.

In a lease transaction, however, the ownership of the equipment always remains/vests with the lesser and lessee only get the right to use the asset for the certain period as agreed. Depreciation and other allowances on the asset will be claimed by the lesser and the asset will also be shown on the balance sheet of the lessor. The lease money paid by the lessee can be charged to his Profit and Loss Account. However, the asset as such will not appear on the balance sheet of the lessee. Such asset for the lessee is, therefore, called off the balance sheet asset.