What Is Hire Purchase System Give Its Merits And Demerits
Hire purchase system is a system under which money is paid for goods by means of periodical installments with the view of ultimate purchase.
What is hire purchase system give its merits and demerits. These are following disadvantages of hire purchase. It allows for the purchase of an expensive consumer good on credit. 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.
Some of the important definitions of hire purchase system are given here. Thanks to the hire purchase system even poor people can buy expensive things. The buyer is then required to make a down payment on their purchase with the balance of the amount due paid off with installment payments plus interest.
A hire purchase scheme can be a great way of getting your hands on it quickly while spreading the cost over an agreed period. The discounts secured will save many families money. Thus this encourages lavish expenditures.
Disadvantages of hire purchase. There are some significant hire purchase advantages and disadvantages though. Hire purchase is a method of financing of the fixed asset to be purchased on future date.
Features of hire purchase. This method of asset finance results in a monthly repayment and transfer of ownership to you once the term ends and all funds have been repaid. 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.
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. Ownership of the asset is transferred after the payment of the last installment. Hire purchase is an arrangement.
On account of the easy payment facility consumers go in for articles which may be beyond their means. Under this method of financing the purchase price is paid in installments. Merits and demerits of hire purchase system.
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