ADVANTAGES OF HIRE PURCHASE SYSTEM:
(A)Advantages to Hire Purchaser:
1.Use of expensive good possible:
The hire purchase system enables people to fulfill their long-cherished dream of owing expensive items like TV, VCR, Car, etc.
2.Easy payment:
Under this method, price of good is paid easily because payment of price is always made by installments.
3.Encouragement to savings:
The price of the goods under this method is to be paid over a long period; the buyer will require curtailing his other expenses so as to pay the installments. It encourages savings habits among them.
4.Facility of free repairs:
If the goods are used carefully by the buyer, it is the responsibility of the owner to make normal repairs free of cost in these goods into the date of payment of last installment.
(B)Advantages to Seller:
1.Increase in sales:
Even people who would not otherwise even dream of buying valuable goods are tempted to buy them because of the hire purchase facility.
2.Recovery of installment easily:
Under this method, if the purchaser makes default in payment, the hire vendor can take back the goods from buyer without requiring to refund the amount already received by him, so the buyer pays the installment himself in time.
3.Facility for getting capital at lower rate:
The capital is available to the seller at lower rate because creditors are in confidence that amount of installments can be recovered regularly from buyer.
(A)Advantages to Hire Purchaser:
1.Use of expensive good possible:
The hire purchase system enables people to fulfill their long-cherished dream of owing expensive items like TV, VCR, Car, etc.
2.Easy payment:
Under this method, price of good is paid easily because payment of price is always made by installments.
3.Encouragement to savings:
The price of the goods under this method is to be paid over a long period; the buyer will require curtailing his other expenses so as to pay the installments. It encourages savings habits among them.
4.Facility of free repairs:
If the goods are used carefully by the buyer, it is the responsibility of the owner to make normal repairs free of cost in these goods into the date of payment of last installment.
(B)Advantages to Seller:
1.Increase in sales:
Even people who would not otherwise even dream of buying valuable goods are tempted to buy them because of the hire purchase facility.
2.Recovery of installment easily:
Under this method, if the purchaser makes default in payment, the hire vendor can take back the goods from buyer without requiring to refund the amount already received by him, so the buyer pays the installment himself in time.
3.Facility for getting capital at lower rate:
The capital is available to the seller at lower rate because creditors are in confidence that amount of installments can be recovered regularly from buyer.
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