(a) Hire purchase is a contract of hire whereby buyer takes possession of goods with an agreement to pay for the price on installment with the option to buy, by completely paying for the price of the goods. This means that goods are merely on hire and not owned by the buyer until the final installment is paid whereas credit sales is a contract of sale , whereby the buyer takes possession and ownership with an agreement to pay the price of goods later or installment.
(i) Advantages of hire purchase to a seller are:
(1) Hire purchase helps a seller to increase his turnover.
(2) It helps te seller to dispose of expensive and durable goods.
(3) The seller charges a higher price for goods.
(4) Seller can repossess the goods.
(5) Seller retains ownership of goods until full payment is made.
(ii) Advantages of hire-purchase to a buyer are:
(1) Buyer enjoys the use of goods even when he has not fully paid for them.
(2) It affords buyer the t :opportunity to acquire expensive goods which he could not have been able to buy by cash.
(3) Hire purchase helps to approve the general living standard of people as buyers are able to have what they need at the right time even when they have not fully paid for them.
(4) Buyer has an opportunity to return goods to seller before completion of payment especially when buyer is no longer interested.
(5) Buyer has access to credit which he could otherwise not have attained from the banks.