Difference between hire purchase and credit sale
Answers
Credit sale in general is defined as purchases made by a consumer that do not require a payment made in full at the time of purchase.
In Malaysia, credit sale is governed under Consumer Protection (Credit Sale) Regulations 2012 which came into operation on 1st October 2012. These Regulations apply to all types of businesses that are required to be registered under any laws relating to the registration of companies or businesses except co-operative societies registered under the Co-operative Societies Act 1993. The most common credit sale in Malaysia involves the purchase of home appliances, furniture and electrical items with seller or credit facility provider such as Courts, Singer and AEON.
According to the Regulations, the term “credit sale” means the sale of goods where –
(a) credit facilities are provided by the seller or the credit facility provider to the purchaser in the sale transactions of such goods;
(b) the purchaser is a consumer;
(c) the goods involved in the credit sales are as interpreted in the Act;
(d) the credit payment involves payment by installment;
but does not include sales where full payment is made via credit card.
Before a credit sale agreement is signed, a seller or credit facility provider must inform the purchaser orally and in written form in a specific document, during the course of making the offer for sale the following information:
(a) the cash price of the goods;
(b) the interest rate imposed;
(c) the period of installments;
(d) the monthly amount payable;
(e) the total price of the goods inclusive of interest;
(f) the ancillary charges;
(g) the delayed payment charge and its formula of calculation;
(h) the total price of the goods inclusive of interest and ancillary charges;
(i) the formula for calculation of rebate;
(j) whether the purchase of goods is subject to a rebate when the goods are promotional goods or when other goods are offered to as a prize for the goods sold; and
(k) the date of delivery of the goods.
The above information shall also be made part of the credit sale agreement entered between the seller or credit facility provider and the purchaser.
The terms and conditions in a credit sale agreement must also include the following details:
(a) the termination of the credit sale agreement;
(b) the implications of default under the credit sale agreement; and
(c) the consultation for settlement with the seller or credit facility provider in the event of default by the purchaser.
Hire Purchase
Hire Purchase on the other hand is governed by the Hire Purchase Act 1967 and defined in the Act as a letting of goods with an option to purchase and an agreement for the purchase of goods by instalments (whether the agreement describes the instalments as rent or hire or otherwise), but does not include any agreement-
(a) whereby the property in the goods comprised therein passes at the time of the agreement or upon or at any time before delivery of the goods; or
(b) under which the person by whom the goods are being hired or purchased is a person who is engaged in the trade or business of selling goods of the same nature or description as the goods comprised in the agreement.
Both credit sale and hire purchase are thus common but different methods of supplying goods under a credit agreement.
Answer:
In hire purchase we purchase the expensive goods in installment by giving the token money only to shopkeeper.
For eg when we go to showroom of bike we purchase the bike only giving inital amount to the shop keeper.
In credit sales consumer purchase the general product by the shop keeper without giving the full amount to them.
For eg a consumer is building the house after looking the site of consumer the shop keeper give the credit facility to the consumer to purchase the raw material for making the house.