Theory question 104
Purchase and Sale of GoodsCommerce 2 (essay, answer five questions only)
State five effects of hire purchase on each of the following:
(a) buyer
(b) seller
Show the model answer
Model answer
(a) Buyer (any five): enjoys use of goods at once; pays gradually from income; pays more than the cash price; goods can be repossessed on default; not owner until the last instalment; may overspend; can acquire costly goods without large capital.
(b) Seller (any five): increased sales; earns interest; risk of bad debts; capital tied up; can repossess goods on default; cost of collecting instalments; repossessed goods may lose value.
Explanation
Include both good and bad effects.