HIRE PURCHASE
A hire purchase is also known as an installment plan
Hire purchase is an arrangement whereby a customer agrees to contract to acquire an
asset by paying an initial installment.
Items which can be bought on hire purchase includes cars, fridges, television sets,
laptops, cellphones, bed,
QUESTION 1
In a hire purchase agreement, the cash price is $3600. A deposit of 33% is paid and interest is
charged at 18% per annum. Monthly installments are paid over 18 months. Calculate each
instalment. [10]
QUESTION 2
Mr Moyo bought a television set marked $1200 on hire purchase. The hire purchase terms were
that he pays a deposit of $600 and the balance and interest to be paid in equal monthly
instalments over 3years. Interest was charged at 20% per annum. Calculate
a) The monthly instalment [7]
b) The hire purchase price [2]
QUESTION 3
An item is bought on hire purchase. It’s selling price was $1600 and a deposit of 25% was paid
for it. If the interest paid was 50%, how much was paid monthly to clear the balance over 18
months. [8]
QUESTION 4
The cash price of a plasma television was $25000. A certain amount of deposit was paid and 30
monthly instalments of $1093.75 were paid. Interest charged was 30% per annum. Find the
deposit that was paid. [8]
QUESTION 5
An item was bought on hire purchase. It’s selling price was $1600 and a deposit of 25% was paid
for it. If the interest paid was 50%, how much was paid monthly to clear the balance over 18
months. [8]
QUESTION 6
Jenny wishes to purchase a washing machine at a cost of $3000 if bought for cash. She enters
into a hire purchase agreement which stipulates that she pays deposit of $1000 and the interest is
charged on the balance due at 10% per annum for 2years. She will pay the amount owing in
equal instalments over this period.
a) Calculate the monthly instalments [10]
b) Calculate the total hire purchase price [2]
QUESTION 7
A woman wishes to buy a sewing machine marked $900 on hire purchase. The hire purchase
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agreement states that she has to pay 33 3 % deposit and then be charged 25% interest on the
balance. If she has to pay the outstanding amount over 2 years, by monthly instalments.
Calculate the monthly payment. [8]
QUESTION 8
A bed was bought on hire purchase after paying a deposit of $250. The twelve monthly payments
were $37.50 each.
a) What was the total hire purchase price? [5]
b) If the interest on the bed had been 50% what was the cash price. [5]
QUESTION 9
Ms Chipo bought a kitchen dresser on hire purchase. The marked price was $8100 and she paid a
certain amount as a deposit. The interest on the balance was charged at 24% per annum. If she
paid the balance plus interest in 12 monthly instalments of $585.90 each, how much did she pay
as deposit? [12]
QUESTION 10
Mrs Muti buys an item for $2500 on hire purchase. She pays a deposit of 20% and interest is
charged on the balance due at 15% per annum simple interest for two years. She will pay
monthly installments over this period. How much is each instalment. [10]
QUESTION 11
A radio is bought on hire purchase after paying a deposit of $2500. The 12 monthly payments
were $375 each.
a) What is the total hire purchase price. [4]
b) If the interest on the balance had been 40%, what would be the cash price. [5]
QUESTION 12
In a hire purchase agreement the selling price is $3600 the rate of interest 18% per annum and
the instalment to be paid monthly for 12 months is $237.18. Find the deposit that must be
paid.[10]
QUESTION 13
A customer pays a deposit of 20% for an article valued at $360 000. Interest is charged on the
balance due at 30% per annum for 3 years. She undertakes to pay monthly installments. How
much is each instalment. [8]
QUESTION 14
An article cost $2676 cash. Alternatively it can be bought on hire purchase terms for 25%
deposit and 24 monthly installments of $115. How much more expensive is it to buy the article
by hire purchase. [8]
