ZIMSEC O Level Commerce Notes: Hire Purchase
Advantages to buyer
- There is no need for the buyer to raise the full purchase amount at once.
- The buyer can use the goods while paying for them.
- The profits generated from using the good(s) e.g. Welding machine during this period can be used to pay the goods’ installments.
- Allows people to buy expensive items.
- Goods are under guarantee during the Hire Purchase period.
- Customers can enjoy higher standards of living.
- Enjoys legal protection during the Hire Purchase period.
- May encourage customers to overspend and buy on impulse.
- Goods are more expensive when compared to cash buying due to additional Finance charges that have to be paid.
- The seller may repossess the goods if the buyer fails to pay installments.
- In the event of repossession the customer is not compensated.
- The goods cannot be used as collateral during this period.
- The customer does not own the goods during Hire Purchase period.
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