01-12-2012, 06:30 PM
ADVANTAGES OF HIRE PURCHASE SYSTEM
ADVANTAGES OF HIRE PURCHASE SYSTEM.pptx (Size: 98.48 KB / Downloads: 29)
Meaning of HPS
Hire-purchase system is a special system of purchase and sale of goods.
Under this system purchaser pays the price of the goods in instalments. The instalments may be annual, six monthly, quarterly, monthly fortnightly etc.
Under this system the goods are delivered to the purchaser at the time of agreement before the payment of instalments but the title on the goods is transferred after the payment of all instalments as per the hire-purchase agreement.
Features
Hire-purchase is a credit purchase.
The price under hire-purchase system is paid in instalments.
The goods are delivered in the possession of the purchaser at the time of commencement of the agreement.
Hire vendor continues to be the owner of the goods till the payment of last instalment.
The hire-purchaser has a right to use the goods as a bailer.
The hire-purchaser has a right to terminate the agreement at any time in the capacity of a hirer.
The hire-purchaser becomes the owner of the goods after the payment of all instalments as per the agreement.
Advantages of HPS
Hire purchase system benefits to consumer , traders and producer. The following are the advantages :
Encourage trade – Traders can easily increase their sales by offering goods under this system. They will be able to get more profits on account of increased sales .
Help industrial development – This system enables small producers to acquire costly and latest machines. The producer can increase output and pay installments out of income earned.