Question

advantages and disadvantages of buying on installment

Answer 1

Disadvantages(i)Committed expenditure: Payment of instalment is a commitmentto pay irrespective of profit or loss in the business.(ii)Obligation to pay interest: Under instalment credit systempayment of interest of obligatory. Generally sellers charge a highrate of interest.(iii)Additional burden in case of default: Sellers sometimes imposestringent conditions in the form of penalty or additional interest,if the buyer fails to pay the instalment amount.(iv)Cash does not flow: Like trade credit, instalment credit facilitatesthe purchase of asset or equipment. It does not make cash availablewhich can be utilised for all needful purposes.18.13 Benefits and Drawbacks of Finance from Co-operative BanksBenefits(i)Loans from co-operative banks are easily available to farmers andsmall businessmen involving minimium formalities.(ii)Co-operative banks provide a convenient means of borrowing. Loansare generally granted at a lower rate of interest.(iii)Sometimes co-operative banks organise training programmes formembers to familiaries them with the various avenues of businessand regarding proper utilisation of loan money.(iv)Being a member of a cooperative bank, the borrower can participatein the management and also share in the profits of the society.(v)Co-operative loans create a sense of thrift and self-reliance amongthe low income group.(vi)Loans are generally given for productive purposes and that helpsto develop the financial and social status of the people.


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Answer 2

advantage......The hire purchase and installment schemes helps and enables the buyers to buy goods beyond their reach

disadvantage..... If the money in not paid at regular intervals seeing 0f the thing may be done