This article will help you to learn about the difference between the Instalment system and the Hire purchase system.
Difference between Instalment System and Hire Purchase System
Hire Purchase System
1. Ownership:
The ownership lies with the seller until the last instalment is paid by the buyer.
2. Rights of Seller:
ADVERTISEMENTS:
If the buyer fails to make the payment in full, the seller can take back the goods from the buyer.
3. Nature of Contract:
The hire-purchase system is an agreement of hiring.
4. Right of Disposal:
ADVERTISEMENTS:
Under the hire-purchase system, the buyer cannot sell the goods till the last instalment is paid.
5. Element of Risk:
In the hire-purchase system, the element of risk is less.
6. Return of Goods:
ADVERTISEMENTS:
Here, the buyer may return the goods without further payment as to future instalments.
Instalment System
1. Ownership:
The property or ownership of goods is immediately transferred to the buyer along with possession.
2. Rights of Seller:
ADVERTISEMENTS:
If the buyer fails to make the payment, the seller cannot take back the goods but the seller can sue him in the court of law to get the payment.
3. Nature of Contract:
The instalment purchase system is an agreement of outright sale.
4. Right of Disposal:
ADVERTISEMENTS:
Under the instalment payment system, the buyer can sell the goods whenever he likes.
5. Element of Risk:
In the instalment system, the element of risk is always there.
6. Return of Goods:
ADVERTISEMENTS:
In the case of an instalment system, the goods are not returnable, unless there is some fault on the seller’s part.