What Is Hire Purchase System Give Its Merits And Demerits
A hire purchase scheme can be a great way of getting your hands on it quickly while spreading the cost over an agreed period.
What is hire purchase system give its merits and demerits. A hire purchase agreement allows a consumer to make monthly repayments over a pre specified period of time. Future income is mortgaged. Thus this encourages lavish expenditures.
Hire purchase is a kind of agreement where the buyer buying an expensive asset chooses an option to pay for the asset by paying some down payment at the time of purchase of an asset and clearing the remaining dues in regular installments including interest. Hire purchase system is a system under which money is paid for goods by means of periodical installments with the view of ultimate purchase. There are some significant hire purchase advantages and disadvantages though.
Ownership of the asset is transferred after the payment of the last installment. Hire purchase is a method of financing of the fixed asset to be purchased on future date. The discounts secured will save many families money.
Disadvantages of hire purchase. All money being paid in the mean time is regarded as payment of hire and the goods become the property of the buyers only when all the installments have been paid. The main features of hire purchase finance are.
Thanks to the hire purchase system even poor people can buy expensive things. Features of hire purchase. A hire purchase agreement allows a consumer to purchase sale items when they aren t in a position to pay in cash.
It allows for the purchase of an expensive consumer good on credit. These are following disadvantages of hire purchase. On account of the easy payment facility consumers go in for articles which may be beyond their means.
Hire purchase gives low income earners the opportunity to buy goods or items that they would have otherwise been unable to buy as a result of their low wages or salaries. Under this method of financing the purchase price is paid in installments. Some of the important definitions of hire purchase system are given here.
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