UNIT 2: HIRE PURCHASE AND DEFERRED PAYMENT

Question 1: What is instalment trading?

• A transaction where customers pay the full amount upfront.

• A transaction allowing customers to buy with a deposit and pay the balance later.

• A scheme where customers receive items without any payment.

• A scheme where customers receive items with coupons.

In instalment trading, when does the customer gain ownership of the item?

• Immediately after paying the deposit.

• Before completing all instalments.

• After completing all instalments.

• At the time of delivery.

What is the purpose of allowing a small down payment in instalment trading?

• To discourage customers from making purchases.

• To show the trader's commitment to the customer.

• To attract customers who cannot pay a large sum upfront.

• To boost seller's confidence on selling the items

How is the outstanding balance paid in instalment trading?

• In one lump sum at the end of the transaction.

• Through fixed instalments over a period of time.

• Through flexible instalments over a period of time.

• By deducting a random amount from the buyer's account.

What can customers expect regarding interest in instalment trading?

• No interest is added in most cases.

• Interest is added only if the payment is delayed.

• Interest is usually added to the cost price.

• Interest is usually added to the sales price.

What is required upon the purchase of goods in a hire purchase agreement?

• A fixed amount of instalment.

• No payment is required.

• A lump sum paid at the end of the agreement.

• A 10% of deposit amount.

In hire purchase, when does the customer gain legal ownership of the goods?

• Immediately upon purchase.

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• After approval of the hire purchase application.

• After completion of payment of instalments.

• Before completion of payment of instalments.

What happens if a customer defaults on payment in a hire purchase agreement?

• The trader loses ownership of the goods.

• The trader can repossess the item.

• The customer gains legal ownership immediately.

• The buyer can get discount from seller.

How does the period of payment affect the total cost in hire purchase?

• Longer periods result in larger amounts of interest added.

• Longer periods result in lower total costs.

• It has no impact on the total cost.

• Longer periods result in lower the profit of seller.

Why is a customer's annual income statement considered in the hire purchase process?

• To confirm the customer's credit worthiness.

• To calculate the final purchase price.

• To determine the trader's profit margin.

• To determine the trader's sales margin.