Question

Explain five circumstances under which a buyer would prefer buying goods under credit purchase rather than hire purchase terms.

Answer 1

1. Where there is need to own the goods as under hire purchase ownership remain with the seller until the last instalment is paid.
2. Where there is need to sell the goods as goods under hire purchase cannot be sold before all instalments are paid.
3. Where there is need to benefit from lower price as hire purchase term is higher.
4. Where there is need to avoid good being repossessed as it is the case in hire purchase terms.
5. Where buyer is buying non durable goods which cannot be sold under higher purchase terms.
6. Where buyer is intending to pay in one instalment and avoid periodic instalment which are required under hire purchase terms.