Question

Write a short note on the following:

Instalment credit as a source of short-term funds for business.

Answer 1

1. Instalment credit is a system in which a customer takes ownership of products after paying a portion of the price and signing a contract to pay the remaining amount in agreed-upon installments.
2. Note that while the purchaser gains ownership, the seller retains title until all installments are paid in full. If the purchaser fails to pay, the seller has the legal right to repossess the items without refunding the sum already paid by the purchaser.
3. Banks and specialized financial organizations are active in installment credit sales and purchases. They pay on the buyer’s behalf and collect the funds in installments.