Hello everyone. Could anyone tell me if in credit sale and hire purchase the payments are based on interest or are interest -free? Thanks
In both types..regular payments are made which u might call interest or part of capital to be repaid.The only difference is the ownership transfer in the end in case of hire purchase and at the outset for credit sale.
Thank you! From what i understand are the payments based on an interest rate e.g. 5% on EUR 100 or fixed (e.g EUR 50 for 2 months?)
5% on EUR 100 would mean installment amount are 5 for the term of 20. Or fixed would mean 50 for 2months It could be either.
Hi - yes, the payments usually include an interest charge. The interest rate might be implicit - so I agree to pay £10 per month for 5 years (a total of £600) for an asset I could buy for cash now for £500. Most HP/credit sale agreements must specify the rate of interest implicit in the payments (ie quote the APR). It is possible to have an interest free (ie 0% APR) agreement - but then the seller will load the purchase price to compensate for the delay in receiving its payments/credit risk.
