Any business and homeowner will be on the lookout for electronics at some point in life. We need TVs to improve our living rooms and take entertainment to the next level. There is no better way to get rid of stress than watching Netflix with your loved ones or enjoying football matches with your friends. There are a host of appliances that we need in our homes to enhance our quality of life.
Payment options for electronics and appliances
There are several considerations when out to purchase electronics and appliances. One such consideration is quality. It is always advisable to focus on the quality of the products you intend to purchase and ensure that you are getting value for your money. Cost is also part of the vital considerations when purchasing assets. One will be eager to find a deal that saves them some money.
Another essential consideration before acquiring any assets is the available payment options. Some businesses only accept cash purchases while others accept financing or installment purchases. In case you are out to learn the differences between cash purchases and hire purchases agreements, here is the comparison.
Cash payments vs Hire purchase agreement
Cash payments involve paying the total cost of the product at once to acquire it. Hire purchase on the other hand entails paying a fraction of the total cost for the product and completing the payment in periodic payments known as installments. Here are the key differences between the two payment modes.
· Ownership
When you purchase the electronics in cash, you immediately acquire them and also become the owner. With a hire purchase contract, once you pay the deposit, you acquire the assets, but you only become the owner after paying the last installment.
· Total cost of the products
In most cases, the total cost of appliances and electronics is lower when one makes cash purchases compared to a hire purchase. The difference is brought about by the interest charged on the installments in hire purchase agreements.
· Effects on cash flow
While cash purchases might seem a good option for appliances or electronics, the downside is the effect that comes with paying a lumpsum amount. A good smart TV, for instance, will cost several tens of thousands to purchase. Paying such an amount at once might mean that you spend an entire salary and even use some of your savings. With a hire purchase, you can spread the cost of the smart TV over several months. This will free some cash that you can use on other expenses and even allow you to make savings.
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