essay on the advantages and disadvantages of instalment schemes.
Answers
Answer:
Advantages(i)Immediate possession of assets: Delivery of assets is assuredimmediately on payment of initial instalment (down payment).(ii)Convenient payment for assets and equipments: Costly assetsand equipments which cannot be purchased due to inadequacy oflong-term funds can be conveniently purchased on payment byinstalments.(iii)Saving of one time investment: If the value of asset or equipmentis very high, funds of the business are likely to be blocked iflumpsum payment is made. Instalment credit leads to saving onone time investment.(iv)Facilitates expansion and modernisation of business and officeBusiness firms can afford to buy necessary equipments andmachines when the facility of payment in instalments is available.
disadvantage-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.
hope it helped
Explanation:advantage and disadvantage of instalment schemes
Explanation:
These schemes let you pay for the things you can not afford or don't have all the money for buying those things. ... Instalment schemes are loans on which the borrower has to make monthly principle and interest payments. • The rate of interest can change any time and if it becomes more,it will become a burden to the payer.