Podcast
Questions and Answers
What happens if the hire purchaser fails to pay any of the instalments in a hire purchase agreement?
What happens if the hire purchaser fails to pay any of the instalments in a hire purchase agreement?
- The hire vendor offers a discount to the hire purchaser
- The hire vendor extends the payment deadline for the hire purchaser
- The hire vendor refunds the earlier payments to the hire purchaser
- The hire vendor takes back the asset without refunding earlier payments (correct)
How are amounts received from the hire purchaser through down payment and instalments treated by the hire vendor?
How are amounts received from the hire purchaser through down payment and instalments treated by the hire vendor?
- As security deposit
- As hire charges (correct)
- As maintenance fees
- As ownership transfer fees
What is the term used for the act of the hire vendor recovering possession of the asset?
What is the term used for the act of the hire vendor recovering possession of the asset?
- Repossession (correct)
- Reacquisition
- Redemption
- Reclamation
How are repossessed assets accounted for?
How are repossessed assets accounted for?
What is the term used for the hire vendor taking back the whole of the asset in a repossession?
What is the term used for the hire vendor taking back the whole of the asset in a repossession?
Study Notes
Hire Purchase Agreement Default
- If the hire purchaser fails to pay any instalments, the hire vendor can take action to recover the asset.
Treatment of Payments
- Amounts received from the hire purchaser are treated as consisting of two parts:
- Down payment, which is payment of part of the purchase price
- Instalments, which are periodic payments towards the remaining purchase price
Repossession
- The act of the hire vendor recovering possession of the asset is termed repossession.
Accounting for Repossessed Assets
- Repossessed assets are accounted for by the hire vendor, with the goal of selling them to recover losses.
Total Repossession
- The hire vendor taking back the whole of the asset in a repossession is referred to as total repossession.
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Description
Test your knowledge of repossession in hire purchase agreements with this quiz. Explore the rights and obligations of the hire purchaser and hire vendor, and understand what happens if instalments are not paid.
