Question

Difference between hire purchase and instalment purchase

Answer 1

Hire Purchase Vs Installment

1. Meaning

Hire Purchase: System of buying goods by making regular payment until the full price is paid.

Installment: System of credit sale in which a sum of money or debt is paid regularly in installment.

2. Nature

Hire Purchase: It possess the nature of hiring

Installment: It possess the nature of selling

3. Ownership Of Good

Hire Purchase: Ownership of good remains with seller until the full price is paid

Installment: Ownership is transferred immediately after the first installment

4. Return  

Hire Purchase: Goods can be returned to the seller before the final installment

Installment: Goods cannot be returned

5. Transfer

Hire Purchase: Buyer cannot transfer or sell the good until the final installment is made.

Installment: Buyer can sell or transfer the ownership of the good at any time.

6. Parties Involved

Hire Purchase: Generally, there are three parties involved:( i) seller, (ii) financing party and (iii) buyer

Installment: Two parties involved: (i) seller and (ii)buyer  

7. Default In Payment

Hire Purchase: In case of default in payment, goods can be seized by the hire-vendor or seller

Installment: Goods cannot be seized in case of default in payment

8. Repair And Maintenance  

Hire Purchase: Seller is responsible

Installment: Buyer is responsible

9. Interest Rate

Hire Purchase: Flat rate

Installment: Interest is already included in the installment amount

Answer 2

Answer:

Difference Between Hire Purchase System and Installment Payment System

Hire Purchase System :-

• Hire Purchase System is a contract of hiring which afterwards turns into sales .

• In Hire Purchase System the ownership remains with the vendor till the last installment is paid.

• The vendor has a right to take the goods back if the costumer fails to pay the amount in installment.

• In Hire Purchase System, the purchaser has no right to transfer the goods to any third party.

• The normal repairs and maintenance of the goods are to be done by the vendor as a responsibility.

Installment Payment System :-

• Installment Payment System is a Sale from the beginning of the agreement.

• In Installment Payment System, the ownership is transferred to the purchaser in the beginning at the time of sale.

• In Installment Payment System, the vendor has no right to take the goods back if the costumer fails to pay the amount in installment , then the vendor can claim the due amount in court.

• In Installment Payment System, the purchaser can transfer the goods to any third party.

• The vendor is not responsible for the repair and maintenance of the goods in installment payment system.

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