Question

Write the advantages and disadvantages of instalment schemes!
Answer in 100+ words
{Points : 12}

Answer 1

hlo dear

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.
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Answer 2

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ADVANTAGE

These schemes let you pay for the things you can not afford or don't have all the money for buying those things. We can decide the co st over a greater period of time to avoid taking the full hit in a month. We also have the option to pull out before we have paid the full amount. Cheaper than a personal loan

DISADVANTAGE

... Not being able to choose when to pay puts you at higher risk of credit card debt or your inst allment purchase payments fail and you incur late fees from them until pa yment is made .