What is difference between Hire Purchase System and Instalment Payment System?
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Answer:
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. Hire Purchase: Buyer cannot transfer or sell the good until the final installment is made
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- Basically it is a hiring goods agreement. The buyer can return the goods before making the final instalment. Hire purchase arrangement, instalment derives its value from the length of time, the sale value of an asset, and basically the interest rate.
Example :
Most of the cars loans offered by garages are hire purchase loans.
- Basically the buyer can not return the goods to the seller. It is also called as the deffered insalment where the buyer is given the ownership as well as the possession of the goods at the time of signing the contract. And also the buyer has the facility to pay the price in instalment.
Example :
Suppose you buy a car and you are paying for it within a given period of time.
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