Hire Purchase and Extended Credit

Consumer durables are bought using this method. They become the property of the buyer when all the payments have been made.

• Hire Purchase

• Credit Card

• Extended Credit

• Finance Company

Who usually organise the finance of the hire purchase?

• Commercial Bank

• Retailer

• Consumer

• Finance Company

This method of credit can allow buyer to become the owner of the goods on the first payment

• Hire Purchase

• Extended Credit

Goods bought on this type of credit cannot be repossessed.

• Hire Purchase

• Extended Credit

In hire purchase agreement, the customer ...

• can sell the goods while paying the instalments

• keeps the goods if payments are not kept up

• owns the goods when the first payment is made

• pays a deposit and monthly instalments

When does the buyer become the owner of goods with a credit sales agreement?

• as soon as the purchase is made

• the buyer never owns the goods, just rent them

• when all the payments have been made

• when half the payments are made

What is an advantage to the buyer of buying on hire purchase?

• A written agreement is made between the buyer and the seller.

• Discount is given when the first instalment is paid.

• It can be used to purchase all kinds of goods.

• The buyer becomes the owner immediately

The consumer cannot return the goods if he or she does not want them anymore.

• Hire Purchase advantage to the consumer

• Hire Purchase disadvantage to the consumer

• Extended Credit advantage to the consumer

• Extended Credit disadvantage to the consumer

There are increased costs of administration, for example, keeping records of payments and amounts owing.

• Hire Purchase advantage to the consumer

• Hire Purchase disadvantage to the consumer

• Hire Purchase advantage to the retailer

• Hire Purchase disadvantage to the retailer

The buyer can obtain better quality goods than the buyer could otherwise afford.

• Hire Purchase advantage to the consumer

• Hire Purchase disadvantage to the consumer