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Requirements For Hire Purchase

. by Kenya Credit

Hire purchase is quickly becoming one of the best payment plans for many buyers in Kenya. The many benefits that a buyer is set to enjoy when they settle for a hire purchase are one of the best reasons to choose them.

Hire purchase is the perfect option for a buyer without all the cash to purchase a given product outright. A hire purchase agreement requires you to only pay a small portion of the total cost of the product. This payment is known as a down payment. Afterward, you will make periodic payments to the vendor to clear the balance.

At Kenya Credit Traders, we have various categories of products for homeowners as well as businesses. We are the biggest and also the best hire purchase dealers in Kenya.

Hire purchase agreements

Hire purchase agreements bind the buyer and the vendor. It contains the terms and conditions of this purchase and the rights of the seller as well as the hirer. It is desirable that a hirer understands the hire purchase agreement before they sign it. Check our other article to understand more about the features of a hire purchase agreement.

Hire purchase requirements

Here are some of the features that must be included in a hire purchase agreement.

  • The items covered under the agreement, for example, furniture, kitchen appliances, mobile phones, or electronic appliances.
  • Most hire purchase agreements will also include the cash price of the item
  • The hire purchase price of the assets. This is the total amount that one pays and includes the down payment and installments.
  • The amount of the installments that one has to pay, and the dates when they need to pay them.
  • The names and addresses of the buyer, the vendor, and any other parties.
  • The rights of the buyer and the vendor.
  • Penalties and charges involved in the hire purchase agreement.
  • Circumstances that will lead to the vendor repossessing the products.

As a buyer, always buy some time to go through the agreement before signing it. This ensures that you understand the terms and conditions fully before signing up.

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Characteristics Of Hire Purchase

. by Kenya Credit

Hire purchase is considered a special system for sales and purchases. Unlike in normal sales, where one pays all the cash to acquire goods or services, hire purchase allows for payment in form of installments.

The buyer acquires the goods immediately after signing the agreement and paying the down payment. All the installments that the buyer pays are treated as hire until they pay their last installment. It is only after paying the last installment that the title of the goods is transferred to the buyer.

Hire purchase agreements

These are agreements or contracts that govern the hire purchase system. The whole process of hiring the goods to purchase them at the end of the hire purchase is outlined in this agreement. It will specify the products being traded, terms and conditions, rights of the buyers and sellers, and instances under which the agreement can be terminated. As a buyer, it is essential to read and understand the agreement before signing. This helps you make an informed decision.

Characteristics of hire purchase agreements

Some of the main features of hire purchase contracts include

  1. The buyer makes an initial payment to the owner of the goods. This is usually referred to as the down payment. The down payment is a small fraction of the total cost of the products.
  2. The buyer acquires the goods after making the down payment. The seller is usually required to deliver the goods to the buyers unless stated otherwise in the agreement.
  3. One requires paying installments to the owner after acquiring the goods. Installments can be paid daily, weekly, monthly, quarterly, or even yearly, depending on the value of the products.
  4. The title of the goods remains with the vendor even after the buyer acquires them. Ownership of the products is only transferred after the hirer makes the last installment payment.
  5. The vendor has the right to repossess the goods should the buyer default on the payments. One ends up losing any payments they had done if the goods are repossessed.
  6. The total cost of hire purchase is usually higher when compared to cash purchase. This is because the installments in hire purchase include interest. The vendor charges interest at a flat rate.

To discover more about the characteristics of hire purchase agreements, visit our blog page. Follow Kenya Credit Traders on Facebook to get the latest deals in Kenya.

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Hire Purchase Interest Rates

. by Kenya Credit

When looking to purchase assets for your home or business, you will be on the lookout for payment options available. Not every buyer is capable of outright purchase. You will not always have all the cash to buy a given item. This means that you will need to consider the financing options available. In some cases, buyers seek a loan from banks, Saccos, chamas, or mobile lending apps. However, loans are usually characterized by high interest rates. This makes them out of reach for most buyers.

Why settle for hire purchase

A hire purchase is a better option when compared to a loan. All that you require is a fraction of the total cost of the item that you wish to purchase. After making the initial payment, you are required to make periodic payments known as installments.

Hire purchase vs cash purchase

When compared to a cash purchase, the total cost of a hire purchase is usually higher. The buyer is taken to be hiring the goods during the period they are paying the installments. You only become the owner after making the last installment payment. The difference between a cash purchase and a hire purchase is brought about by the interest charged on the installments by the seller.

Hire purchase vs term loans

The main difference between hire purchases and term loans is the interest rates. Term loans are subject to changes in interest rates. On the other hand, one is charged a flat interest rate when they settle for a hire purchase. This makes hire purchase a favorable option for any business owner or a homeowner looking for assets.

How are hire purchase interest rates calculated?

Different dealers usually offer different hire purchase prices for their products. Shopping around helps you identify a seller offering you the best deal. However, interest rates are almost similar for all these vendors. Here are some aspects that determine the interest rates:

  • The length of the hire purchase agreements
  • Total number of installments
  • Your down payment
  • The cash price of the asset
  • The value of the asset at the end of the agreement
  • The borrower’s credit score

Find the best hire purchase deals on our website. Also, follow Kenya Credit Traders on Facebook for great hire purchase deals in Kenya.

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Lease Purchase Vs Contract Hire

. by Kenya Credit

Lease purchase and contract hire are some of the payment options available to a buyer when in the market to purchase an asset. Each of these financing methods has pros and cons. It is thus vital to understand them before choosing any of them.

Lease purchase agreements

Lease purchase contracts are considered rent-to-own arrangements between the seller and the buyer. While this payment option looks similar to hire purchase payments, there are some notable differences. A good example is when one is out to purchase a home. If you settle for this payment method, you will initially pay the rent. However, the rent in this arrangement might be higher than the market price. The additional rent that one pays goes towards the down payment on the property.

The main difference between a lease purchase and leasing is that one has an obligation to purchase the assets at the end of the leasing contract. One makes a lump sum payment, also known as a balloon payment, which allows one to acquire ownership of the property, car, or any other assets.

Contract hire

Contract hire is the official name for leasing. When one chooses contract hire, they will acquire assets from the leaser to utilize for the period specified in the leasing agreement. However, at the end of the agreement, one is required to return the assets to the seller. This means that one doesn’t acquire ownership of the items at any given point. You will be paying for using the items throughout the contract and return them to the owner when the agreement expires with no further obligations. You can negotiate to extend the lease or you can find new items or sellers.

The best part about contract hire is that the rentals are fixed. This means that one can easily budget and make appropriate plans. One doesn’t have to worry about depreciation of the assets or even disposal when they settle for contract hire.

Learn about different financing options by visiting our Kenya credit traders Limited blog. Also, follow us on Facebook to learn about new deals and products.

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Gas Stove Buying Guide in Kenya

. by Kenya Credit

Your home’s kitchen is arguably the most important of the home. You will want to find quality appliances for your kitchen to ensure meals are ready on time and without a hassle. One of the appliances one wants to purchase is a gas stove. This is usually considered a long-term decision considering that they come with high utility and long life.

Gas stoves are available in the market, and you will not lack options when looking for one. They come in a variety of sizes, styles, costs, and features. Finding the right one for your home should not be a daunting task if you consider the following aspects.

1.      The size of the gas stove

Before one enters the market to find a gas stove, it is essential to determine whether there is adequate space for it. Ensure that there is enough space in your kitchen to store the gas stove. The size of the gas stove also determines the number of burners. Stoves usually come with two, three or four burners. It is vital to select the number of burners depending on the size of your family or even your cooking habits.

2.      The material, finish, and color

The material of the gas stove determines the level of maintenance required as well as the durability of the stove. The best gas stoves are usually made of stainless steel. This aims at preventing rusting, considering that the kitchen environment is usually steamy. Steel can withstand high temperatures since it is not prone to damage. There are gas stoves that come with glass or fiber finishing. They can improve the aesthetics of your kitchen, but they are fragile and require high maintenance.

3.      Brands and features

Before investing in a gas stove, it is also vital to ensure that it is made by a reliable brand. It is also advisable to check online reviews before settling for a given brand. This helps you learn the most affordable and safe gas stove to invest in. Ramtons is one of the most trusted brands in Kenya since it is not only safe but also fairly priced.

4.      Cost and payment options

You are always likely to have a budget in mind when out to find the best gas stove to invest in. It is essential to settle for a dealer that not only sells gas stoves at a reasonable price but also offers better payment options. Kenya Credit Traders is one of the best dealers in Kenya since they allow you to purchase different appliances on hire purchase terms. This allows you to experience the benefits of a gas stove while making the payments in form of installments.

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How To Get Hire Purchase

. by Kenya Credit

Hire purchase is one of the most favorable financing options available to buyers in the Kenyan market. There are plenty of assets one can purchase using hire purchase. From furniture, kitchen appliances, mobile phones, and electronics, to cars and houses, there are plenty of assets a business or an individual can acquire using a hire-purchase agreement.

How hire purchase works

With a hire purchase, you do not need to have all the cash with you to acquire an asset. It is the ideal alternative when you do not have the money for an outright purchase. One needs to put down a deposit for the asset, which is a percentage of the total cost. After making this down payment, the total cost is spread over a period. This duration usually depends on the worth of the assets you are purchasing. This is beneficial since it helps protect the buyer from disruptions in their cash flow and capital.

How to get hire purchase

When you have identified the assets that you require for your home or business, it is time to find the best hire purchase deal. Here are some essential tips to help you get a hire purchase.

  • Research about interest rates: the difference between deals from one vendor to the other is usually a result of the annual percentage rate of interest. Carry out your research to understand interest rates and have an idea before committing to any deal. Here is an educative blog about hire purchase interest rates.
  • Always consider the total cost: one of the reasons one settles for a hire purchase is the flexibility that this payment option offers. However, low monthly repayments will mean a higher total cost. On the other hand, fewer months means less interest and lower overall cost. Most hire purchase dealers require you to provide financial statements to prove that you are able to pay the installments.
  • Compare deals from different dealers: Different vendors will have different deals. Take your time to compare the deals and find one that suits you. Cheaper products at times mean lower quality. The best solution is to seek value for your money.
  • Do not rush: While the benefits of hire purchase can excite any buyer, it is advisable that one takes time and read through the hire purchase agreement. Understanding the terms and conditions ensure that you make an informed decision.

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Hire Purchase Vs Lease Consideration

. by Kenya Credit

Forking large amounts of cash to purchase assets may not be viable to a business or even a homeowner in some instances. If you are running a new business, you might not have all the cash to purchase the assets that you require. Buying assets such as furniture, vehicles, or even real estate property at large amounts of money will have a great effect on your cash flow. It is the same case for homeowners. When you build, rent or even purchase a new home, you might not have all the money to buy new furniture sets, kitchen appliances, and electronic appliances that are necessary. This means that one needs to look for alternative financing options.

Leasing

Renting assets rather than physically owning them is one of the financing options you can utilize. This makes sense, especially for items that you won’t need in the long run. It is also a considerable choice for items whose value is expected to depreciate over time. Leasing involves acquiring assets from the leaser. You will be required to pay monthly installments for the period specified in the lease agreement. After the expiry of the agreement, you will have no further obligations. You can choose to extend the lease and retain the items, or you can move on to another lessor.

Hire Purchase

Hire purchase is almost similar to leasing, although there are some notable differences. This involves paying an upfront amount of cash as a down payment. This is usually a fraction of the total cost. After the down payment, you acquire the assets and utilize them as your own. You will be required to make monthly payments as per the contract. The good part about a hire purchase is that you will become the owner of the items after paying the last monthly installment.

Considering hire purchase vs leasing

Both hire purchase and leasing have benefits as well as shortcomings. The decision thus depends on your individual circumstances and needs. Here are some of the factors to check:

·         Frequency of use

If you only need a given asset for a short period of time, it is not advisable to purchase it through a cash purchase or even a hire purchase. Leasing is the most desirable option in such cases.

·         Lifespan

One also needs to check when they will require upgrading a given asset. It is not worth investing in an item that will be outdated soon. A short-term lease makes sense for such items.

·         Restrictions

When you settle for leasing, there are some restrictions on how to use the given items. Since you will b returning the items to the leaser, you might be charged additional costs if you didn’t consider the restrictions. Hire purchase doesn’t have such restrictions, considering that you will become the owner at the end of the contract.

To keep learning about hire purchase in Kenya, visit our blog page. Also follow us on Facebook, Kenya Credit Traders for the latest, hottest deals on hire purchase.

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Title In Hire Purchase Agreements

. by Kenya Credit

Hire purchase is quickly becoming a popular financing option for persons in the market for new items. In Kenya, it is possible to acquire different assets through hire purchase, commonly referred to as lipa mdogo mdogo. Whether it is a new smartphone, smart, digital, or android TVs, refrigerators, furniture sets, or kitchen appliances, that one needs, it is possible to acquire them through hire purchase. Leading credit companies such as Kenya Credit Traders have hire purchase offers for a wide variety of products.

Reasons To Consider Hire Purchase

There are plenty of reasons why more people are settling for hire purchase. One such benefit is the ability to split the cost of an asset over a longer duration. This helps you maintain your cash flow. Payment is done in installments after making the initial payment thus helping you split the cost over the period. Another reason why hire purchase is becoming common is the fact that one acquires a given asset even before making total payments. After making the initial payment, one acquires the asset. However, the title of the asset is only transferred after one has paid the last installment, thus exercising their obligation to purchase the asset.

What Does A Title In Hire Purchase Agreement Mean?

When out to sign any hire purchase agreement, there is a need for one to understand the terms and conditions of the agreements. It is crucial to also understand the terms used in the agreement before signing the contract. Title is of the terms that feature in any hire purchase agreement.

The term title is used in a hire purchase agreement to mean ownership of the assets. When you acquire goods on hire purchase, you do not have the title transferred immediately. You will only become the owner of the assets once you have exercised the right of purchase, after making the last payment.

Since the title of the goods is not transferred to the hirer (buyer) immediately, it means that they cannot resell the assets. In case one doesn’t honor the agreement, the owner (seller) has the right to repossess the goods.

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Hire Purchase Financing In Kenya

. by Kenya Credit

Financing options in Kenya

Financing is always one of the primary considerations when one is in the market to find new assets. In the case of businesses looking to add new equipment, there are numerous financing options they can settle for. It is the same case for homeowners looking to buy new items to furnish their homes. Term loans, leasing, cash purchase, and hire purchase are some of the financing choices to select from. However, each of these payment modes has advantages and disadvantages. The decision on the ideal financing mode to select depends on a variety of factors. In this post, we will discuss hire purchase financing in Kenya.

What Is Hire Purchase?

Hire purchase is a financing option that allows you to split the cost of a particular asset over a given duration. The seller provides the buyer with the items once they make the down payment. This is usually a small fraction of the total cost of the goods. The rest of the cost is paid in form of monthly installments. Unlike leasing, one automatically becomes the owner after they complete payments.

Hire Purchase In Kenya

Hire-purchase agreements are common in Kenya. The agreements are governed by the hire purchase Act, Cap 507. This mode of financing has been around for some time now.

In the past, hire purchase was only popular among businesses or individuals investing in high-value assets such as machinery, cars, or even real estate property. However, in modern times, there are a variety of assets available on hire purchase.

It is possible to acquire smartphones, TVs, kitchen appliances, furniture, or electronic appliances through a hire purchase contract. Leading dealers such as Kenya Credit Traders Limited make the process of acquiring new assets for your home easier.

Why Settle for Hire Purchase Agreements

There are plenty of reasons to settle for hire purchase agreements. One such benefit is that hire purchase has reasonable interest rates when compared to exploitive bank loans. Unlike leasing, you will have the title or ownership of the items transferred to you when you pay all the installments. The ability to split the cost over a long duration, at times up to 5 years, means that you do not have to feel the pinch on your cash flow.

On our Kenya Credit Traders Blog page, we have many educative articles about hire purchase agreements in Kenya. Also, check us on Facebook to learn the latest deals.

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Difference Between Hire Purchase and Cash Purchase

. by Kenya Credit

Every buyer is keen to learn payment options available whenever they are in the market to purchase assets. Different items cost varying prices. For some items that don’t cost much, one will need to make an outright purchase. However, in some instances, you might not have all the money to purchase a particular item that you require. This is when one learns about other financing options such as hire purchase, leasing, or even taking a term loan.

What is a hire purchase?

When you do not have all the cash to purchase household or business assets, hire purchase is one of the best payment options to consider. In this payment option, one just pays an initial amount of the total cost, known as the deposit. The balance is cleared in regular installments. After paying the deposit, you can acquire the asset to use as you clear the balance. You get assets such as refrigerators, household furniture, microwaves, fridge guards, and gas cookers among others on hire purchase at Kenya Credit Traders.

The difference between hire purchase and cash purchase

1.      Impact on your cash flow

When you are purchasing outright, you will be paying all the required amounts of cash at once. In the case of a business, this will have an effect on your cash flow. Even in the case of household items, one might use all their savings on furniture, smart TV, or even a smartphone. When you choose hire purchase, it is a chance to spread the cost over a period of time. This will help you properly plan for your cash.

2.      Ownership of the items

When one opts to purchase items outright, it will be the chance to own the item immediately. On the other hand, one immediately acquires the items after making the deposit. You have the chance to utilize the asset even before you acquire full ownership. However, one will only acquire ownership of the item after one makes the last payment.

3.      Total cost of the item

In the case of a cash purchase, one can expect the cost of the item to be lower than the total cost of the same time on hire purchase terms. The interest is spread across the payment duration.

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