- Financial Accounting
- Accounting for Installment Sales
- Advantages - Benefit of Installment Sales
There are various advantages in installment sale transaction for both the buyer and the seller.In developing countries where people cannot afford asset by making a lump sum payment, this mode of asset acquisition is awesome. Some of them are:
Some of the benefits - advantages are as follows:
- Seller can enjoy high gross profit margin because he or she is providing the asset at a very nominal down payment,
- Buyer can acquire the possession of the asset by making just nominal down payment which usually ranges from 10 % to 30 %.
- Seller keeps the original documents of the asset, that is why the risk of theft and fraud are reduced.
- In developing countries where the inflation rate is increasing and people are losing their purchasing power, installment sale is an important tool to acquire the asset.