INSTALMENT PURCHASE OF HOUSEHOLD DURABLE EQUIPMENT IN HYDERABAD (A. P.) - BENEFITS AND PROBLEMS
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Date
1989
Authors
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ACHARYA N.G. RANGA AGRICULTURAL UNIVERSITY, RAJENDRANAGAR HYDERABAD
Abstract
Instalment purchase of household durable equipment
is gaining popularity. More agencies and consumers are
likely to venture into this fia«d. In the absence of
adequate research support and legislative measures, the
consumers will be exploited by the Agencies 9¥ charging
usurious rates o:f interests. The study provides sooe
:factual data regarding additional amounts that are to be
incurred. The results may be of some help to the policy
makers to initiate the measures to regulate the business.
This study is undertaken with the following objectives.
1. To find out the reasons for instalment selling and
purchase. To know the attitudes and awareness of the consumers
re&arding the benefits and problems of instalment
credit.
3. To compare the down payment and cost of credit in
different agencies.
4. To work out the true rates of interest charged and
to compare it with the a:ru:ounced interest rates.
5. To trace out terms and conditions, procedures adopted
by different agencies under the instalment schemes.
The investigation was carried out ill Hyderabad City
of Andhra Pradesh State. Five popular equipment~ were selected
for the study. One Quasi Govemment Agency, four
Nationalized Banks, four Non-nationalized Banks and five
Private Agencies were randomly selected. Hundred families
were randomly selected for this study representing ten from
.APSTC and each of the five Private Agencies (i.e. two
f'amilies per equipment), five families per Bank (i.e. one
family per equipment) were randomly selected. Interview
schedule method was adopted for the collection of data.
The primary reason for going instalment purchase of
the durable equipment among majority of the consumers was
nonavailability of money in lumpsum.Majority of the clientele were of the opinion that
instalment purchase was advantageous mainly because it
facilitated the purchase of certain costly equipment.
One of the important disadvantage of instalment
purchase from the point of clientele was the limited choice
of equipment followed by the additional coet incurred in
instalment purchase. With regard to the consumer awareness of Agencies
involved in instalment selling/credit, Private Agencies were
more popular. Very few consumers were aware of the Bank's
consumer credit facility.
From the results it was obvious that the amount of
down payment and number of instalments were inversely related
with the monthly ~stalm~nt amounts.
Private Agencies and APSTC charge Flat rate of
interest whereas Banks charge Diminishing rate of interest.
The results clearly revealed that the cost of credit
was two to three times more in case of Private Agencies and
.APSTC than in the Banks. Cost of credit was directly
proportional to the number of instalments and rate of interest. The investigation fUrther highlighted that there
were significant differences between Agencies in respect
of the true rates of interest. There observed difference
between the announced rates of interest and true rates of
interest in case of all Private Agencies, APSTC and one
Bank.
The consumer opinion about instalment purchase showed
that most of them were satisfied with the instalment
purchases and they would like to continue it, even in the
future.
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Keywords
INSTALMENT, PURCHASE, HOUSEHOLD, DURABLE, EQUIPMENT, HYDERABAD,