Hire Purchase System:
The hire purchase system is a method of buying goods in which the buyer pays for them in installments over a period of time. It is a popular method of financing for consumers who cannot afford to pay the full price of an item upfront. Under a hire purchase agreement, the ownership of the goods is transferred to the buyer only when the final installment is paid.

Difference between Hire Purchase System and Credit Sales:

1. Ownership:
- In hire purchase, the ownership of the goods is not transferred to the buyer until the final payment is made. Until then, the buyer is considered as a hirer.
- In credit sales, the ownership of the goods is transferred to the buyer immediately, even if the payment is made in installments.

2. Payment Structure:
- In hire purchase, the payment is made in installments over a fixed period of time. The buyer pays a down payment initially, followed by regular installments until the full price is paid.
- In credit sales, the payment can also be made in installments, but there is no fixed period or structure. The terms of payment are usually agreed upon between the buyer and the seller.

3. Risk:
- In hire purchase, the risk of the goods lies with the hirer until the final payment is made. If the hirer defaults on the payments, the seller has the right to repossess the goods.
- In credit sales, the risk of the goods lies with the buyer from the moment of purchase. If the buyer fails to pay, the seller may take legal action to recover the payment but cannot repossess the goods.

4. Interest:
- In hire purchase, interest is charged on the outstanding balance of the purchase price. The interest rate is usually fixed and agreed upon at the time of the agreement.
- In credit sales, interest may or may not be charged, depending on the terms agreed upon between the buyer and the seller.

Conclusion:
In summary, the hire purchase system involves the buyer paying for goods in installments over a fixed period, with ownership transferring upon the final payment. In credit sales, ownership transfers immediately, and the payment terms are more flexible. The hire purchase system provides a method of financing for those who cannot afford to pay the full price upfront, while credit sales allow buyers to make purchases on credit without the need for installments.