Close this search box.

Hire Purchase and Rent-To-Own: The Difference.

Hire Purchase and Rent-To-Own: The Difference. Daily Law Tips (Tip 721) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)


Common in auto-mobile retailing is hire purchase. Hire purchase is a hire that comes with an option to purchase the hired goods. It is a mixture of a contract of hire and an option to purchase. Recently, in the real estate sector is a new diction and option; “Rent-To-Own”. Both hire purchase and rent-to-own are commercial options, where there is no immediate cash for an outright purchase. The difference between the two determines their separate legal implications and benefits. This work focuses on the nature and differences between hire purchase and a rent-to-own. 

Nature of Hire Purchase and Rent-To-Own: 

The nature of a Rent-to-Own transaction mandates a tenant to acquire the property of his landlord through an instalment payment of a purchase price. Hence, in a Rent-to-Own transaction, the landlord/owner of the property retains ownership of property, while the tenant/purchaser takes possession of the property and the agreed purchase price is paid over time in instalments. Upon the complete payment of the agreed purchase price to the owner/landlord, the ownership of the property transfers to the tenant/owner. It is not impossible to find a Rent-to-Own transaction, where both ownership and possession of a property are transferred on credit to a tenant/purchaser, allowing instalment payment of purchase price to landlord/seller. 

Hire Purchase Vs. Rent-To-Own: 

A Rent-to-Own is not a hire purchase transaction rather could be a conditional credit sale transaction or a credit sale transaction. It is a conditional credit sale where ownership of property is maintained by the owner/landlord, while possession is held by the tenant/purchaser and ownership will transfer to the tenant/purchaser, upon full payment of purchase price by the tenant/purchaser. It is a credit sale where both ownership and possession of property is transferred to the tenant/purchaser, ahead of full payment of purchase price by the tenant/purchaser. In a hire purchase transaction, a hirer is not under any obligation to purchase hired goods, unlike in a Rent-to-Own transaction, where a tenant/purchaser is mandated to purchase the subject matter of agreement. 

My authorities, are:

  1. Sections 1 to 20 of the Hire Purchase Act, 1965. 
  2. The judgment of the Supreme Court of Nigeria (on the meaning of hire purchase) in the case of RAIMI v. OGUNDANA & ORS (1986) LPELR-2938(SC). 
  3. The judgement of the Supreme Court of Nigeria (on the concept of hire purchase) in the case of AJAGBE v. IDOWU (2011) LPELR-279(SC)
  4. The judgment of the Supreme Court of Nigeria (on the nature of hire purchase) in the case of AFROTEC TECHNICAL SERVICES (NIG) LTD v. MIA & SONS LTD & ANOR (2000) LPELR-219(SC). 

Sabi Law Projects:










Feel free to reach the author, ask questions or make inquiries on this topic or any other legal issues via or +2348037665878.


This work is published under the free legal awareness project of Sabi Law Foundation ( funded by the law firm of Bezaleel Chambers International ( The writer was not paid or charged any publishing fee. You too can support the legal awareness projects and programs of Sabi Law Foundation by donating to us. Donate here and get our unique appreciation certificate or memento.


This publication is not a piece of legal advice. The opinion expressed in this publication is that of the author(s) and not necessarily the opinion of our organisation, staff and partners.


🛒 Take short courses, get samples/precedents and learn your rights at

🎯 Publish your legal articles for FREE by sending to:

🎁 Receive our free Daily Law Tips & other publications via our website and social media accounts or join our free whatsapp group: Daily Law Tips Group 6


Get updates on all the free legal awareness projects of Sabi Law (#SabiLaw) and its partners, via:

YouTube: SabiLaw

Twitter: @Sabi_Law

Facebook page: SabiLaw

Instagram: @SabiLaw.org_

WhatsApp Group: Free Daily Law Tips Group 6

Telegram Group: Free Daily Law Tips Group

Facebook group: SabiLaw




This publication is the initiative of the Sabi Law Foundation ( funded by the law firm of Bezaleel Chambers International ( Sabi Law Foundation is a Not-For-Profit and Non-Governmental Legal Awareness Organization based in Nigeria. It is the first of its kind and has been promoting free legal awareness since 2010.


As a registered not-for-profit and non-governmental organisation, Sabi Law Foundation relies on donations and sponsorships to promote free legal awareness across Nigeria and the world. With a vast followership across the globe, your donations will assist us to increase legal awareness, improve access to justice, reduce common legal disputes and crimes in Nigeria. Make your donations to us here  or contact us for sponsorship and partnership, via: or +234 903 913 1200.



Leave a Reply

Related Posts

Contact Support


Welcome! Log into your account