Disadvantages Of Hire Purchase Agreement
Even with a solid deposit on the transaction, the interest rates of a lease agreement mean that the final cost of the item is higher than if it were purchased directly. For example, during the term of a 5-year contract, the final cost of a vehicle worth $US 21,000 can exceed $30,000 if all payments are added together. Some buyers may qualify for inexpensive or free financing to reduce this problem, although this disadvantage applies to the average deal. “The Hire Purchase system is a system where money is paid for goods in periodic installments for the final purchase. All money that is paid in the meantime is considered rent and the goods only become the property of the buyers when all the monthly payments have been paid. .