Chapter 12~Household Purchases

Question 1

Cash purchase?

Answer 1

• Customer becomes the owner of good. Immediately
• payment passes to seller immediately
• you do not build up any debts

Question 2

Credit purchase/buying goods on credit?

Answer 2

• customer receives the goods immediately
• payment passes to seller at a later date
• Electricity/telephone bills are paid this way

Question 3

Credit cards/store cards?

Answer 3

• they can lead to impulse buying
• customer reviews good immediately
• convenient

Question 4

Renting/leasing?

Answer 4

• customer is never the owner of good
• you may end up paying more than you would have if u paid directly
• if it breaks, you don’t have to pay for it

Question 5

Hire purchase?

Answer 5

Used by a household to purchase goods such as fridges, computers ect… The financial institution pays the shop. The financial institution collects regular instalments from the buyer over an agreed period of time. The item does not belong to the buyer until the final payment is made.

Question 6

2 advantages of hire purchase

Answer 6

• no security required

* buyer gets to use the item without having paid the full amount

Question 7

1 disadvantage of hire purchase

Answer 7

•the item doesn’t belong to the buyer until the final payment is made

Question 8

4 requirements for hire purchase advertisements

Answer 8

• cash price of good
• total cost of good when using hire purchase
• the APR of interest
• the number of payments and the amount of each

Question 9

ways of paying for goods and services

Answer 9

• cash purchase
• credit purchase
• hire purchase
• credit cards/store cards
• renting leasing
• loan