In our day-to-day life we see lot of transactions of money like sale purchase of lands, bunglows, houses, flats etc. To make payments in transactions involving large sums of money, normally people borrow money from a bank or a finance company. The money borrowed is called LOAN.
The loan is returned in parts payable at equal intervals of time, and this called as installments.
INSTALLMENT BUYING (PURCHASE) SCHEME:- The system of purchasing as article by making payments in installments is known as installment buying scheme or installment purchase scheme. Here a customer is not required to pay a part of it at the time of purchase and rest in easy instalments, which could be monthly, quarterly, half yearly or even yearly. The time between two successive installment dates is called Payment Period.
Below are some terms which are related to Installment Buying (purchase) scheme:-
CASH PRICE: Cash price of an article is the amount which a customer has to pay as full payment of the article at the time it is purchased.
CASH DOWN PAYMENT: Cash down payment is the amount which a customer has to pay as part payment of the price of an article at the time of its purchase.
BALANCE DUE: The difference of cash price and cash down payment of an article in an installment buying scheme is known as the balance due.
AMOUNT DUE: It is the sum of the of the balance due and the interest earned on it at the end of the installment scheme.
FUTURE VALUE OF AN INSTALLMENT: Is is the sum of the value of an installment and the interest earned on it at the end of the installment scheme.
FUTURE VALUE OF ALL INSTALLMENTS: It is the sum of the future values of all the instalments at the end of the installment scheme.
The loan is returned in parts payable at equal intervals of time, and this called as installments.
INSTALLMENT BUYING (PURCHASE) SCHEME:- The system of purchasing as article by making payments in installments is known as installment buying scheme or installment purchase scheme. Here a customer is not required to pay a part of it at the time of purchase and rest in easy instalments, which could be monthly, quarterly, half yearly or even yearly. The time between two successive installment dates is called Payment Period.
Below are some terms which are related to Installment Buying (purchase) scheme:-
CASH PRICE: Cash price of an article is the amount which a customer has to pay as full payment of the article at the time it is purchased.
CASH DOWN PAYMENT: Cash down payment is the amount which a customer has to pay as part payment of the price of an article at the time of its purchase.
BALANCE DUE: The difference of cash price and cash down payment of an article in an installment buying scheme is known as the balance due.
AMOUNT DUE: It is the sum of the of the balance due and the interest earned on it at the end of the installment scheme.
FUTURE VALUE OF AN INSTALLMENT: Is is the sum of the value of an installment and the interest earned on it at the end of the installment scheme.
FUTURE VALUE OF ALL INSTALLMENTS: It is the sum of the future values of all the instalments at the end of the installment scheme.
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