3. Are hire purchase transactions covered by the Money Lenders Ordinance (Cap. 163)?

3. Are hire purchase transactions covered by the Money Lenders Ordinance (Cap. 163)?

The answer depends not only on the form but also the substance of the transaction. A genuine hire purchase transaction is an arrangement whereby the hirer shall hire and purchase the goods by making instalment payments to the owner, and the legal ownership of the goods is transferred from the owner to the hirer upon payment of the final instalment or exercise of the option to purchase. A genuine hire purchase transaction is not a loan of money by the owner of the goods to the hirer of the goods. However, if a transaction is in form and substance a loan of money, it will be caught by the Money Lenders Ordinance (Cap. 163) and any attempt to disguise its true nature by calling it a hire purchase or drafting the transaction agreement to look like a hire purchase agreement would not work.