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Part 1 shows the reducing balance method . 

This article looks at how the hire purchase interest is apportioned over the period of the agreement using the Straight Line method.  Continue reading How To Apportion Hire Purchase Interest-Straight Line Method (Part 2 of 3)

Note that the hire purchase interest needs to be apportioned over the period of the agreement. The commonly used methods are the Reducing Balance method, Straight Line method and Sum of Digits or Rule of 78 method 

Below example illustrate the Reducing Balance method to apportion hire purchase interest:-  Continue reading How To Apportion Hire Purchase Interest-Reducing Balance Method (Part 1 of 3)