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Explain the term ‘Hire Purchase’ - Junior Cycle Business Studies - Question 10 - 2018
Question 10
Explain the term ‘Hire Purchase’. This is a financial arrangement whereby a person gets the use of a good for a period of time by paying a deposit and then paying r... show full transcript
Worked Solution & Example Answer:Explain the term ‘Hire Purchase’ - Junior Cycle Business Studies - Question 10 - 2018
Step 1
Explanation of 'Hire Purchase'
Answer
Hire Purchase is a financial arrangement that allows an individual or entity to acquire the use of a good over a specified period. Initially, the buyer pays a deposit to gain access to the item immediately. Following this, the buyer is required to make regular instalment payments over an agreed time frame.
The key features of Hire Purchase include:
- Deposit Payment: An upfront payment is made which is typically a percentage of the total price of the good.
- Instalment Payments: The buyer agrees to pay a series of instalments over time. These payments are usually structured to be made monthly.
- Ownership Transfer: The buyer does not own the good outright until the final payment is completed. Once all instalments have been paid, ownership of the good is transferred to the buyer.