Advantages of Hire Purchase System:

• (1) Convenience in Payment:
• (2) Increased Volume Of Sales:
• (3) Increased Profits:
• (4) Encourages Savings:
• (5) Helpful For Small Traders:
• (6) Earning Of Interest:
• (7) Lesser Risk:
• (1) Higher Price:

Disadvantages of Hire Purchase

• The loan is secured against the vehicle: The vehicle can be repossessed if payments are not kept up.
• Non-payment can negatively affect your credit rating.
• The finance company are the legal owners of the vehicle until the agreement is paid in full.

Hire purchase is an arrangement for buying expensive consumer goods, where the buyer makes an initial down payment and pays the balance plus interest in installments. With hire purchase agreements, the ownership of the merchandise is not officially transferred to the buyer until all the payments have been made.

The primary financial benefits for a company using a hire purchase plan include maximizing working capital, the ability to enhance the financial appearance of the company to investors and the potential of payment flexibility.

Hire purchase means a transaction where goods are purchased and sold on the terms that: (i) Payment will be made in installments, (ii) The possession of the goods is given to the buyer immediately, (iii) The property (ownership) in the goods remains with the vendor till the last installment is paid, (iv) The seller can …

Advantages and Disadvantages of Debentures Investors who want fixed income at lesser risk prefer them. As a debenture does not carry voting rights, financing through them does not dilute control of equity shareholders on management.

Hire Purchase System is a special system of purchase and sale. Goods are delivered to the purchaser at the time of Hire Purchase Agreement but purchaser will become the owner of goods only on the payment of the last installments. All the installments paid are treated as hire till the last installment is paid off.

There are numerous advantages to lease financing including:

• Less initial cash investment required.
• Lower monthly payments.
• Tax benefits.
• Fast turnaround time.
• Conserve your capital.
• Avoid technological obsolescence.
• Assist corporate growth.
• Let the equipment pay for itself.

Leasing is the easiest method of financing fixed assets. No mortgage or hypothecation is required. Restrictions involved in long-term borrowing from financial institutions are avoided. Formalities involved in leasing are much less than in case of borrowing from financial institutions.

Though he has the right to take that the Asset or Property from the hiree, the second-hand goods fetches lesser price than the actual cost. Again, if repossessed, it may come with defects needing repairs. For hiree, there is a risk of loss or usage of the Asset if the buyer fails to pay the installment.

Another name for the hire purchase is an installment plan. This term is very popular in the United States and Canada. In this article we are going to take a look at some of the advantages and disadvantages that are associated with the hire purchase system. What are the advantages of hire purchase?

In case of hire purchase the person who has taken the good on hire cannot transfer the goods to a third party as he or she does not have the ownership of the goods. Every installment is treated as hire charge for using the asset. The hire vendor has the right to repossess the asset in case of difficulties in obtaining the payment of installment.

The hire vendor has the right to repossess the asset in case of difficulties in obtaining the payment of installment. If the hirer does not want to own the asset, he can return the assets any time and is not required to pay any installment that falls due after the return.