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A retail purchase is a transaction between a business and a consumer. A retail purchase occurs when a consumer seeks goods or services from a retailing business. In this case, the buyer will aim at purchasing the products for his or her own use. Wholesale purchases on the hand involve businesses that acquire products from other businesses and later resell them to consumers.

In modern times, retail purchases can be done through a variety of channels. In the past, one would require visiting a local store physically to find any products that they require. This is still possible in modern times. However, online purchases are also common in recent times.

The emergence of online shopping

Online shopping is common in modern times. Even before one steps out of the house to find assets, they access the internet using a phone, a tablet, or a laptop to find out the best quality, the best deals, and reliable dealers to engage. One can browse products and services from the comfort of their home or office. If you are finding the best dining sets, you can find a variety on the internet, from the best dealers such as Kenya Credit Traders. Some online retailers allow you to place an order online and they deliver the products to your doorstep.

Types of retail businesses

There is a broad variety of businesses that are considered retail businesses. This means that any assets you buy from such firms are considered retail purchases. Here are some categories of retail purchases:

  1. Food: The biggest percentage of retail purchases involve food products. We need food daily for our day-to-day activities. This means that a good percentage of our retail purchases are food products.
  2. Soft goods or consumables: This includes items that we require in our daily lives, such as toiletries, shoes, and clothing.
  3. Art: Things such as books, fine art, and musical instruments can also fall under retail purchases.
  4. Hardlines: These are assets that we need in the long run. Items such as electronic appliances, kitchen appliances, furniture, and cars can also fall under this category.

Payment options for retail purchases

Most items that are inexpensive are usually paid in cash. In the case of online retail purchases, there are plenty of mobile banking platforms that can be utilized to complete the purchases.

In the case of high-value items such as furniture, appliances, and cars, it might not be possible to make outright purchases. In such cases, hire purchase agreements become a desirable option. Learn more about hire purchase agreements on our website.

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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.

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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.


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.

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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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.

Lease financing is one of the popular ways for businesses to acquire assets in modern times. The many benefits of lease financing, when compared to a cash purchase or even hire purchase, makes it a favorite among businesses.

Lease financing agreements are contracts where the lessor allows the lessee to utilize their asset over a given period. Lessor is the term used in these contracts to refer to the owner of the assets. The lessee is the party that is hiring the items. In exchange for the right to use the asset, the lessee is expected to make periodic payments. However, the lessor remains the owner of the assets. The lessor can even cancel the agreement in a case where the lessee contravenes the terms of the contract or engages in any illegal activity using the hired equipment.

Lease agreement guide – Things to look at

A good lease financing agreement will comprise certain terms as the basis of the agreement. Here are some factors included in a lease agreement.

1.      Lease duration

The duration of the lease agreement usually depends on the assets, the hirer’s needs, and the cost of the equipment. If your needs are likely to change quickly, a short duration is desirable.

2.      Financial terms

The lease financing agreement also needs to be specific on timelines of payments. This includes when the periodic payments are due and also the last due date for any late payments. Penalties also form part of the agreement.

3.      Payment due to the lessor

As a business, before choosing lease financing, there is a need to check your financial health to determine whether you can afford the periodic interest as well as principal payments.

4.      Market value of the assets

Before signing an agreement to acquire any asset, there is a need to check its market value. This helps you to assess maintenance or insurance costs to protect the equipment.

5.      Cancellation provisions

As part of the lease agreement guide, there is a need to have guidelines for contract cancellation. In most cases, when you opt to cancel the lease agreement, there will be penalties involved.

6.      Lease renewal

The lease agreement also ought to contain guidelines on the renewal process when the lease contract expires. In some cases, some contracts have a purchase option at the end of the lease agreement. This means that when you make the given payment you will acquire full ownership of the asset.

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Introduction to Leasing

Leasing is gaining popularity in Kenya among many business owners in recent times. Lease financing is considered one of the best choices when looking for medium and long-term financing options. In lease agreements, the lessee is the person acquiring the asset. The asset’s owner is known as the lessor. The lease contract grants the lessee the right to utilize particular equipment in exchange for periodic payments. When the lease period is over, the asset will go back to the owner, unless the lease contract is extended, or a case where there is a compulsory buying clause in the lease agreement.

In lease agreements, the lessee doesn’t acquire ownership of the assets. Ownership is retained by the lessor. There are plenty of lease advantages and some disadvantages too.

Lease financing advantages

Leasing comes with benefits both to the lessee and the lessor. However, here we will focus on benefits to the lessee.

1.      Good utilization of capital:

By opting to lease assets, a business avoids spending a lot of money to purchase assets upfront. You will acquire the same assets and only pay small monthly or annual rents to utilize them. The funds can be utilized elsewhere, thus making planning easier for the business.

2.      Cheaper

Leasing is cheaper when compared to other financing options available for a business looking to acquire assets. It is the ideal choice when you only need the assets for a given duration.

3.      Technical support

The lessor remains the owner of the assets. In most cases, to ensure proper maintenance of the asset, they offer technical support to the lessee.

4.      Inflation-friendly

The cost of the items can rise due to inflation. However, when you have leased the assets, you are required to pay a fixed amount monthly or annually, whether or not the cost of the asset rises.

Lease financing disadvantages

Leasing also comes with some disadvantages to the lessor. Here are some of the lease financing disadvantages.

                                I.            Ownership

Unlike other financing options, one doesn’t automatically become the owner of the asset at the end of the agreement. In lease purchase agreements, one can become the owner if they make a balloon payment.

                             II.            Compulsion

Lease agreements are usually non-cancelable. This means that you have to pay the installments even when you do not intend to use the asset. If you opt to cancel the agreement, the charges are usually high.

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Hire purchase has numerous benefits when you are looking for the ideal financing options for household items. Whenever you need to improve your home, there are plenty of items that you can spend on. However, at times, one doesn’t have all the cash, they need to purchase particular assets. This means that they cannot make cash purchases. In such cases, hire purchase becomes the best option.

How hire purchase agreements work

In hire purchase, one is only required to have a fraction of the total cost of a given item. After they make the down payment, they will sign an agreement with the seller that allows them to spread the payments over a given period. Payment is done in monthly installments. When one pays the last installment, the ownership of the household item is transferred from the seller to the buyer.

Benefits of hire purchase

Here are some advantages of hire purchase when in the market for household items.

1.      Acquire the asset immediately

Unlike in the case of a cash purchase where one needs all the money to acquire a given item, hire purchase allows you to acquire an asset at just a fraction of the total cost. Whether it is a TV, home furniture, or kitchen appliances, you just require a fraction of the total cost. Afterward, you will continue paying installments periodically until you clear the cost.

2.      Own an asset at the end of the agreement

In the case of a lease agreement, one doesn’t own any asset even when they complete paying the set installments. On the other hand, if you choose to hire a purchase, you will own a given asset after you make your last payment.

3.      Fixed interest rates

Some buyers settle for a term loan when looking to finance a household asset. However, hire purchase has fixed rates for the duration of a set agreement. This means that there are no additional costs after you sign the agreement.

At Kenya Credit Traders, we have a variety of household items available on hire purchase terms. Also follow us on Facebook, Kenya Credit Traders for the latest household items in Kenya, available on Hire purchase.


When you want to purchase something for your home but you do not have all the cash at hand, then it is worth considering a higher purchase mode of payment. Hire purchase is a great way to get the asset that you want even when you do not have all the required money.

How does hire purchase work?

When you opt for a hire purchase to buy assets such as appliances, electronics, or furniture for your home, you will only be required to pay a deposit. This is usually a fraction of the total price of the asset you intend to purchase. According to the agreement between you and the seller, you will be required to pay the balance within the set duration. In the case of personal assets, the installments are spread out over several months. This helps you to spread out payment. After paying the deposit, the asset you need will be delivered to your home. However, its ownership will be transferred to you when you pay all the installments.

Advantages of hire purchase

Spread out the purchase cost: The number one reason to choose hire purchase is that you will spread out the cost of buying the assets that you require. You do not have to pay one big lump sum for the smart TV, furniture, or kitchen appliances. This is convenient especially if you are paid monthly as you can easily plan for the payment.

Get the item once you sign the agreement: In a case where one wants to purchase items on cash terms, they might need to save several months before ever acquiring the asset. On the other hand, when you choose to hire purchase, after paying the deposit and signing the agreement, you will have the right to use your asset. You do not have to wait until you have saved enough.

Get full ownership after the last installment: In the case of lease agreements, one only pays installments, but they never get the ownership of the asset. On the other hand, a hire purchase functions like a rent-to-own agreement. You will be using your smartphone, subwoofer, or even kitchen cooking gas while paying the installment. After the last installment, you will have the ownership transferred from the seller. This is a better alternative to leasing items.



What is hire purchase?


Hire purchase is one of the payments methods available in the modern Kenyan market. If you are looking to purchase appliances, furniture, electronics, and other expensive assets for your home, the price might be a bit high. This means that one might be unable to purchase such products and pay all the required cash at once. Hire purchase allows you to pay a fraction of the total amount initially, known as a deposit or down payment. You will pay the remaining balance within a set duration, and in various installments. The deposit is paid initially when the product you require is delivered.

How Does A Hire Purchase Agreement Contract/Agreement Work?

If you opt to purchase a certain asset for your home using a hire purchase agreement, you will be required to pay the deposit but not the whole price. After paying your deposit, you will have the right to use the asset. However, the ownership of the asset remains with the seller. After one pays the down payment, one will need to pay the set installments with interest. The terms and conditions relating to the period of repayment are decided before one signs the agreement. The ownership of the appliance, furniture, or electronics will only be transferred when one completes paying the installments. This means that the asset can be repossessed by the seller if the buyer fails to pay the installments.

Types Of Hire Purchase

Hire purchase is usually divided into two categories

  • Industrial hire purchase: In this case, the assets are purchased by a company or a business. This usually involves purchasing high-end machinery.
  • Consumer high purchase: Kenya Credit Traders Limited specializes in this type of high purchase. It usually involves a consumer purchasing personal assets to furnish their home. Whether you need furniture, electronics, kitchen appliances, or other essential assets, this is the ideal payment method.

Visit our site to view products available on hire purchase terms.