Fig. 1 shows a retailer offering a washing machine to customers. The customer pays a deposit, takes the goods home, and then makes fixed monthly payments. T...
Question 1 Report
Fig. 1 shows a retailer offering a washing machine to customers. The customer pays a deposit, takes the goods home, and then makes fixed monthly payments. The retailer keeps legal ownership until the final payment has been made.
(a) Identify the type of consumer credit shown in Fig. 1. [1]
(b) State one reason why a consumer may use this type of credit to purchase the washing machine. [1]
(c) Give two features of this credit arrangement that the retailer should explain to the customer before the agreement is signed. [2]
Answer Details
(a) This consumer credit arrangement is hire purchase [1].
(b) The consumer can obtain and use the washing machine immediately without paying the full price at once [1].
(c) Before signing, the retailer should explain the deposit required [1] and the number or amount of monthly instalments [1]. The total amount repayable or interest, the fact that ownership passes only after the final payment, and consequences of missed payments are also important valid features.
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