Which of the following statements about the disadvantages of…

JAMB Commerce 2023 276 views
Source: JAMB · 2023

Which of the following statements about the disadvantages of hire purchase is correct?

  1. The buyer owns the asset immediately after the first payment
  2. Hire purchase agreements often have higher overall costs due to interest ✓
  3. There are no penalties for late payments
  4. It is a risk-free method of acquiring assets
Explanation

Hire purchase lets you pay in instalments, but the seller adds interest. So the total you pay is higher overall than the cash price.

The buyer does not own the item until the last instalment, and late payment can lead to the item being taken back.

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