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Hire purchase is calculated using the simple interest formula, and interest is only calculated on the amount owing.
A = S ( 1 + i.n)
Where:
A = Total amount after interest
S = Starting amount after deposit has been subtracted (no interest)
i = Interest rate (divide the % by 100, and then again by 12, 4, or 6 depending on the number of times interest will be calculated)
n = number of time periods that the purchase agreement states to pay over (24 months, etc)
Substituting the given values into the formula will give you the total amount to be paid after interest has been accrued.
To calculate the repayments, you divide the answer derived as A (total amount) by the number of repayments (n) you have to make.
It is a really simple process, and it will only ever use the simple interest formula.
Hope this was helpful ^^
What else can I help you with?
How do you do the formula to find hire purchase in mathematics?
number of months multiplied by amount of deposits
When was the Origin or development of hire purchase?
origin and development of hire purchase
What are the advantages of hire purchase as a source of finance?
Hire purchase can give the good profit,
Advantage of hire purchase?
One advantage of hire process is that it allows low-income individuals to purchase items that would otherwise be out of their budget. Hire purchase is also known as installment plan.
What means repossesion as regard to hire purchase?
If a company fails to make it's repayment under the hire purchase agreement then the loan providers can tale the goods bought under the hire purchase as settlement for the loan.
Why would a company use hire purchase?
The legal term for hire purchase is a contract. Companies may prefer using hire purchase because it spreads the costs of expensive items over a period of time.
What is the explanation for the features of hire purchase system?
higher purchase
Solve you a problem on hire purchase system?
caluculation of intrest under hire purchase system
What is the meaning of hp?
Hire Purchase
Hire purchase?
Paying in instalments
What is the adjective for hire?
The verb to hire has the participle adjectives hiring and hired. For the noun hire, it can be used as a noun adjunct (hire car, hire purchase).
Is hire purchase classed as unsecured debt?
No, hire purchase is generally considered a form of secured debt. In a hire purchase agreement, the item being financed acts as collateral, meaning the lender can reclaim it if the borrower fails to make payments. This security for the lender distinguishes hire purchase from unsecured debt, where there is no collateral backing the loan.
