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Difference between hire purchase system and installment payment system?
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Difference between hire purchase system and installment payment system...
Hire Purchase System vs Installment Payment System
Definition
Ownership of Goods
Interest
Payment Schedule
Default and Repossession
Conclusion
In summary, both hire purchase and installment payment systems allow the buyer to purchase goods over a period of time. However, there are differences in ownership of the goods, interest, payment schedule, and default and repossession rights. It is important for buyers to understand the terms and conditions of each system before making a purchase.
Definition
- Hire Purchase System: A system of buying goods in which the buyer pays part of the price when the goods are delivered and then makes regular payments until the full price is paid.
- Installment Payment System: A system of buying goods in which the buyer pays for the goods in installments over a period of time, typically with interest.
Ownership of Goods
- Hire Purchase System: The ownership of the goods remains with the seller until the buyer makes the final payment.
- Installment Payment System: The ownership of the goods is transferred to the buyer once the first installment is paid.
Interest
- Hire Purchase System: Interest is included in the regular payments made by the buyer.
- Installment Payment System: Interest is added to the total cost of the goods and spread out over the installments.
Payment Schedule
- Hire Purchase System: The payment schedule is usually fixed and cannot be altered without the agreement of both parties.
- Installment Payment System: The payment schedule can sometimes be altered or extended with the agreement of both parties.
Default and Repossession
- Hire Purchase System: If the buyer defaults on payments, the seller has the right to repossess the goods.
- Installment Payment System: If the buyer defaults on payments, the seller may take legal action to recover the money owed but cannot repossess the goods.
Conclusion
In summary, both hire purchase and installment payment systems allow the buyer to purchase goods over a period of time. However, there are differences in ownership of the goods, interest, payment schedule, and default and repossession rights. It is important for buyers to understand the terms and conditions of each system before making a purchase.
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Difference between hire purchase system and installment payment system? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Difference between hire purchase system and installment payment system? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Difference between hire purchase system and installment payment system?.
Difference between hire purchase system and installment payment system? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Difference between hire purchase system and installment payment system? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Difference between hire purchase system and installment payment system?.
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