Hire Purchase System
It
is a agreement between two parties may be hire purchaser and hire seller. In
this system the hire purchaser will make a down payment to the seller and later
the hire purchaser will pay the remaining amount on regular intervals the
certain agreed amount in the agreement which has been taken place between the
two parties.
§ In this system the ownership of the asset is transferred to hire
purchaser only after full payment is made to the hire seller of the asset.
§ In this system the hire
seller has the right to take back the asset if the hire purchaser fails to make
the payment amount.
§ The contract that has taken
place between the hire purchaser and hire seller is completely supported by a
legal formalities if the dispute between hire purchaser and hire seller arises.
Installment Purchase System
Installment
purchase is system of purchase where the installment purchaser purchases goods
from installment seller on the date of purchase. The position and legal
ownership of the asset by undertaking to pay the price of the asset in a
certain number of installment along with interest at an agreed rate on the
unpaid balance amount of the asset.
Feature of Installment Purchase System
§ The cash price of asset purchase are to be paid by the installment
purchaser to the installment seller in a certain number of installment.
§ In this system Installment Purchaser not only gets the possession
of the asset but at the same time also gets the legal ownership on the date of
purchase.
§ If the installment purchaser fails to make payment then installment
seller does not have any right to take back the asset from installment
purchaser.
§ The total amount which is payable by the installment purchaser is
always greater than the cash price of the asset.
§ The difference between the total amount payable by the installment
purchaser and the cash price of asset is the asset for installment
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