Question

Difference between hire purchase and installation methods

Answer 1

Hire Purchase System: It is a hiring goods agreement. ... Hire Purchase System: Ownership of goods is transferred after the payment of final installment. ... Hire Purchase System: All the risks are borne by the vendor before the payment of final installment.

Answer 2

Answer:

Difference Between Hire Purchase System And Installment Payment System

Hire Purchase System

• Hire Purchase System is a contract in beginning which turns into sales after the payment of last installment.

• The ownership of goods remains with the seller till the last payment of installment.

• The vendor has a right to take over the goods, if the purchaser fails to pay the price in Installments.

• The Purchaser can't transfer the goods to any third party before the payment of last installment.

• If a purchaser fails to pay the amount of goods , the seller or vendor has a right to take the goods back considering the prepaid amount of Installment .

• During the Hire Purchase period, the vendor bears the risk and responsibility of repairs and maintenance of the goods .

• Hire Purchase System involves two methods of Accounting in the books of Purchaser - Assets Accrual Method and Credit Purchase Method.

• Vendor bears the risk of the goods till the last payment of installment.

Installment Payment System

• Installment Payment System is Sales from the beginning but on credit basis.

• The ownership of goods are transferred to purchaser in the beginning at the time of first transaction .

• Seller doesn't have any right to take the goods back, if the costumer fails to pay the amount in Installment.

• The Purchaser can transfer the goods to any third party after the first transaction.

• The Seller can claim in court for the recovery of outstanding amount of money.

• The Seller is not responsible for the repair and maintenance of the goods.

• Installment Payment System are maintained by only one method.

• The Seller doesn't bears any risk as whole risk is upon the Purchaser.

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