BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Purchaser pays for item by instalments over a period of time
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Asset does not belong to purchaser when delivery is received from supplier
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Cost to buyer is likely to be higher than it would be for a normal purchase
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Trade discounts cannot be offered on hire purchase
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Detailed explanation-1: -Which of the following would not make a distinction between a hire purchase and a ‘normal’ purchase? Notes: Purchaser pays for items, Assets and cost to buyer will make a distinction between a hire purchase and a ‘normal’ purchase.
Detailed explanation-2: -Quality of asset purchased does not give a difference between a hire purchase and a nominal purchase.
Detailed explanation-3: -When a sale is made, the ownership of goods is transferred immediately to the buyer of the goods. On the contrary, in case of hire purchase, the ownership of the asset is transferred to the hire purchaser, on the payment of the last instalment. In case of a sale, the buyer’s position is that of the owner.
Detailed explanation-4: -The property in goods passes to hirer along with its possession-this is not correct in relation to hire purchase.
Detailed explanation-5: -instalments are given It is the difference between the hire purchase price (down payment + total instalments) and the cash price.