Hire Purchase Flashcards
1
Q
What is hire purchase
A
This is the payment to use an asset in instalments to spread the cost of an asset over its useful life.
2
Q
What are the advantages of hire purchase
A
Avoids the need to pay a lump sum for the use of an asset.
Makes planning and budgeting easier.
Spreads the cost of the asset.
Asset becomes yours at the end of the term.
3
Q
What are the disadvantages of hire purchase
A
The overall amount tends to be more than paying it outright.
Only really suitable for low cost assets.
4
Q
Is hire purchase a short term or long term source of finance
A
Long term source of finance
