'hire-purchase' is a compound of the English words 'hire' and 'purchase', where 'hire' historically meant 'to pay for the temporary use of something' and 'purchase' meant 'to acquire by payment'.

The compound arose in British English in the late 19th and early 20th centuries in legal and commercial contexts (e.g. 'hire-purchase agreement') to describe a credit arrangement; it combined the older verb 'hire' (Old English hīeran / to rent) and 'purchase' (from Old French 'porchacier' / Middle English 'purchasen').

Initially the two words separately conveyed renting and buying; over time the compound came to denote a specific credit contract in which possession may be given before ownership transfers, and today refers primarily to that installment-purchase system.