Difference Between Hire Purchase And Installment
The main dissimilarities or difference between hire purchase system and installment system can be pointed out as follows:
1. Meaning
Hire Purchase: System of buying goods by making regular payment until the full price is paid.
Installment: System of credit sale in which a sum of money or debt is paid regularly in installment.
2. Nature
Hire Purchase: It possess the nature of hiring
Installment: It possess the nature of selling
3. Ownership Of Good
Hire Purchase: Ownership of good remains with seller until the full price is paid
Installment: Ownership is transferred immediately after the first installment
4. Return
Hire Purchase: Goods can be returned to the seller before the final installment
Installment: Goods cannot be returned
5. Transfer
Hire Purchase: Buyer cannot transfer or sell the good until the final installment is made.
Installment: Buyer can sell or transfer the ownership of the good at any time.
6. Parties Involved
Hire Purchase: Generally, there are three parties involved:( i) seller, (ii) financing party and (iii) buyer
Installment: Two parties involved: (i) seller and (ii)buyer
7. Default In Payment
Hire Purchase: In case of default in payment, goods can be seized by the hire-vendor or seller
Installment: Goods cannot be seized in case of default in payment
Also Read:
Also Read:
8. Repair And Maintenance
Hire Purchase: Seller is responsible
Installment: Buyer is responsible
9. Interest Rate
Hire Purchase: Flat rate
Installment: Interest is already included in the installment amount
Hire Purchase Vs Installment (Comparison Chart)
I hope this post is helpful to understand the difference between hire purchase and installment system and to make comparison between them.
Hire Purchase Vs Installment (Comparison Chart)
Basis For Difference
|
Hire Purchase
|
Installment
|
Introduction
|
Buying goods by making regular payment
|
Credit sale in which debt is paid regularly
|
Nature
|
Hiring
|
Selling
|
Ownership
|
Remains with seller
|
Transferred to buyer
|
Can Be Returned ?
|
Yes
|
No
|
Transfer/Sell
|
Buyer cannot sell the good before the final installment
|
Buyer can transfer the good to others
|
Parties
|
Seller, financing party and buyer
|
Seller and buyer
|
Default In Payment
|
Goods are seized
|
Cannot be seized
|
Repair/Maintenance
|
By seller
|
By buyer
|
Rate Of Interest
|
Flat rate
|
Added in the installment amount
|
I hope this post is helpful to understand the difference between hire purchase and installment system and to make comparison between them.
