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Hire purchase is the ultimate choice for business owners and consumers looking for expensive assets. Hire purchase allows a buyer to invest in assets that would be out of reach if they had to pay in cash. It also ensures that you get access to quality products. Here’s a look at how hire purchase deals balance affordability and quality.

How Hire Purchases Make Items Affordable

One of the best reasons to settle for a hire purchase deal when you need products is the ability to make items affordable. Items such as furniture, appliances, and electronics can be really expensive. If one has to wait until they save enough to purchase these items, they might take months or even years.

If you choose a hire purchase deal, you can acquire products that are not affordable in a cash purchase. A hire purchase deal allows you to acquire products by only paying a fraction of the total cost. The balance is then spread into monthly installments. Spreading the cost into flexible and affordable installments makes the products accessible and affordable.

How Hire Purchase Makes Quality Products Accessible

Another benefit of hire purchase is that it makes quality products accessible. By making products affordable, customers no longer have to compromise quality due to the high cost of the assets. Customers who cannot purchase items due to affordability usually settle for cheap items.

Hire purchase empowers buyers to buy almost any product on the market. The flexible and affordable installments mean a buyer can acquire products at any given time. Quality products do not come at cheap prices. However, spreading the cost to small affordable amounts makes the products accessible to all consumers.

How KCT Balances Affordability and Quality of Products

Kenya credit traders offer consumers the opportunity to upgrade a home by offering furniture, appliances, electronics, and gadgets. You do not need to wait until you have enough savings to spend on your dream smart TV, a dishwasher, or even a refrigerator. With only 15% of the cost of any items you require, KCT will provide them and allow you to clear the balance in installments. All products at KCT have a warranty, and this means you do not have to worry about the quality of these products.

Hire purchase, like any other financial decision, has benefits, disadvantages, and pitfalls. Hire purchase remains one of the best asset financing options for consumers and business owners. The many benefits of hire purchase agreements motivate buyers to consider this purchase option. However, when you are not keen, you can end up making a mistake that will prove costly.

What Is a Hire Purchase Agreement

A hire purchase agreement is a contract between a hirer and a dealer that allows the hirer to acquire goods without paying upfront. Before acquiring assets, the hirer has to pay a deposit to the dealer. After the deposit, the hirer clears the balance in installments.

Benefits of hire purchase agreements

There are different benefits that will motivate a hirer to sign a hire purchase agreement. Here are some of the benefits.

·         Quick access to items:

Hire purchase ensures you can access items even when you can’t afford to pay in cash. By choosing hire purchase, you only need to pay the deposit and prove you can afford the installments.

·         Flexible and affordable repayments

Another major benefit of a hire purchase deal is that the repayments are flexible and affordable. You can negotiate with the dealer to get a deal tailored to suit your needs.

·         Access quality assets

Lack of enough funds can lead to a buyer settling for low-quality items. However, hire purchase makes even the most expensive assets affordable through spreading the cost. This means you no longer have to compromise quality due to lack of enough funds.

Hire Purchase Pitfalls

While hire purchase has so many benefits, there are also pitfalls that a buyer ought to consider. Here are some pitfalls and how to avoid them.

1.      Hidden charges

There are hire purchase dealers that have hidden costs when you choose them. The downside of the hidden charges is that they increase the total cost of the assets. To avoid this pitfall, there is a need to check the contract thoroughly and understand all the charges before signing.

2.      Discretionary purchases

At times, one can be tempted by the benefits of hire purchase deals to spend on items they do not need. It is always advisable to only spend on assets that will improve your home or enhance productivity in your business.

3.      Rogue dealers

When you are not keen, you can end up in hands of scammers. It is always desirable to carry out due diligence and settle for reputable dealers such as Kenya Credit Traders. Only choose a hire purchase company that is licensed.

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Hire purchase is one of the best financial decisions one can make when in the market to purchase assets. There are plenty of benefits of hire purchase. One such benefit is spreading the cost. By choosing to hire purchase, the buyer pays in installments to meet the total cost of the items—another major benefit of a hire purchase agreement is better finance management. The installments are fixed throughout the hire purchase agreement. This means you can budget ahead for the repayments, thus giving you better control over your finances.

In this post, we will check how you can enhance finance management while having a hire purchase agreement.

Ideas for managing finances during a hire purchase deal

Hire purchase repayments are flexible. When signing a hire purchase deal, you can negotiate with the dealer to ensure you get a deal that suits your needs. Here are other ways to manage your finances.

·         Only use hire purchase to purchase items that you need

Hire purchase can be exciting due to the prospect of spreading the cost. This makes almost any asset affordable. However, it is vital to only spend on items that add value to your home or business. Spending on items that you do not need will only make them a liability rather than an asset.

·         Negotiate for the best deal

When signing a hire purchase deal, there is a need to negotiate with the dealer for installments that suits your needs. Hire purchase agreements are flexible. One gets to choose the duration within which they will pay for the items.  Longer duration means low installments which are affordable. However, if you are capable of paying a higher amount in installments, it will mean that the hire purchase agreement takes a shorter duration.

·         Pay extra to clear the balance ahead of schedule

At times, a hirer can have extra cash to clear the balance. When you can pay ahead of schedule, it will help you avoid defaulting even in a case where you are well up financially. Most hire purchase agreements allow for early payments.

·         Return the goods back to the dealer

Most hire purchase deals allow for the hirer to end the agreement. You do not need to wait until you sink into debt to end the hire purchase deal. When you no longer need assets you are hiring, you can end the agreement.

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Are you acquiring assets for your home or business? Are you torn between a hire purchase agreement and leasing?

High value assets can be expensive for any business or consumer to pay in cash. In such cases, finding financing options is the best choice. Some business owners settle for loans to purchase assets. However, the high interest rates can be a hinderance. Leasing and hire purchase are thus the ideal choice when you are looking to acquire new assets.

How a Leasing Agreement Works

Leasing involves hiring assets from a dealer for a given duration. The hirer acquires the items from the dealer for use. During the duration of the leasing the items, the hirer pays installments to the dealer. At the end of the hire purchase agreement, the hirer returns the assets to the owner.

How A Hire Purchase Agreement Works

A hire purchase agreement is almost similar to a leasing contract. In this case, you pay a certain amount as the down payment for the asset. After paying the deposit, you acquire the items and you can utilize them. One also makes repayments throughout the hire purchase agreement. At the end of the hire purchase agreement, the hirer acquires the ownership of the assets.

Differences Between Hire Purchase and Leasing

There are key differences between hire purchase and leasing agreements. Here are some of the differences.

1.      Transfer of ownership

The issue of ownership is the biggest difference between leasing and a hire purchase agreement. There is no chance to become the owner in the case of leasing. However, in a hire purchase agreement, one becomes the owner when they complete payments.

2.      Deposit

One doesn’t need to pay a deposit to acquire an asset in a leasing agreement. However, in the case of a hire purchase agreement, you are required to make a down payment before taking the assets. This is usually a fraction of the total cost. The down payment can be as low as between 10% and 20%.

3.      Duration of the agreement

It is possible to have a lease agreement that lasts several years. In the case where you still need the assets, you can choose to extend the lease agreement. This is not the case with a hire purchase agreement. To reduce the total cost of the assets, the buyer reduces the duration of the agreement. Hire purchase agreements usually lasts several months.

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Hire purchase remains one of the best financing methods in the Kenyan market. Consumers as well as businesses can benefit from hire purchase when acquiring high-ticket assets. Furniture, cars, electronics, appliances, and machinery are some of the common assets you can acquire on hire purchase terms.

It is vital to consider effort and time finding the right hire purchase agreement before committing to a deal. Just like in any financial decision, it is desirable to check a variety of aspects to get the best out of a hire purchase deal. Here are the key considerations.

Considerations in a hire purchase agreement

1.      Do you need the asset

Before committing to a hire purchase agreement, one needs to determine whether they actually need the asset. Hire purchase deals can look exciting due to the spread cost. However, one should only invest in items they require.

2.      Is the asset a long term investment?

Hire purchase is not the best option for short-term investments. The total cost of a hire purchase deal is always higher than a cash purchase. In the case of short-term assets, it is advisable to settle for leasing as it will offer you a better deal.

3.      Depreciation

There are assets a consumer or a business purchases with a view to resell them in future. When considering the total cost of the items, it is important to consider whether it will be useful at the end of the hire purchase agreement. This helps you determine whether you can get a better resale value.

4.      Interest rates

The total cost of items in a hire purchase deal is higher than cash purchase as a result of interest charged on the installments. Lower rates mean lower total cost. Compare interest rates from different dealers to ensure you get the best deal.

5.      The total cost of the items

It is advisable to compare total cost of items with the cash price. However, while hire purchase price is higher, it is vital to keep in mind that the cost is spread out, making the payment process easier.

6.      The reputation of the dealer

Before signing the hire purchase agreement, it is vital to ensure the dealer is reliable. Online reviews, comments on their social media pages, and ratings can help you understand whether a given company is reliable.

7.      The repayment terms

Before signing a hire purchase deal, check the repayments terms to ensure they are favorable. Late payments and defaulting can see the dealer repossess the items.

8.      Penalties

It is also vital to check the penalties charged in the case of late or missed payments. These charges only increase the total cost of the items.

9.      Hidden charges

The hirer also needs to check the hire purchase agreement to determine whether there are any hidden charges that can increase the cost of the assets.

10.  Other financing options

When acquiring assets, it is desirable to assess different financing options. Always focus on finding the best deal that offers value for money.

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Are you thinking about purchasing on a hire purchase agreement? Are you worried about your credit score? As with any financial decision, it is essential to invest effort and time and identify out what is right for yourself.

How do hire purchase agreements work?

A hire purchase agreement is a purchase deal that allows a buyer to acquire items without having to pay the full cost upfront. In a hire purchase agreement, a buyer only pays a deposit to acquire assets. This is usually between 10% and 15% of the total cost. Once the buyer makes the down payment, they acquire the assets and they can utilize them. However, during this period, the buyer is only hiring the items and is referred to as the hirer. The seller retains ownership title until the hirer makes full payment for the assets.

What Is the Role of Credit Score in Hire Purchase Agreements?

Credit checks play a part in hire purchase transactions. A hire purchase dealer relies on your credit rating to determine whether you are eligible for a hire purchase deal. A credit rating provides the dealer insight into the creditworthiness of the hirer. Here are some reasons why dealers rely on the credit score.

1.      Mitigating risks

The primary reason the dealer will check your credit score is to mitigate risk. The credit trader tries to understand whether the hirer has a history of defaulting payments. Dealers that do not check credit scores risk not receiving payments from the hirer.

2.      Ensuring affordability

By checking your credit score, the dealer can determine whether you can afford the hire purchase agreement. Your income and expenses provide the dealer an insight on whether you have sufficient income to make payments.

3.      Protecting you as a buyer

A hire purchase deal can be exciting for any buyer. If the dealer approves applications without credit checks, it is possible for a buyer to sign a hire purchase agreement that is not conducive or affordable. Missed payments, late payments, and defaulting not only damage your credit score, but they can also cause the dealer to repossess the items.

Can I Get a Hire Purchase Agreement with A Bad Credit Rating?

Buyers with bad credit ratings can be eligible for hire purchase agreements. However, it is likely that you will pay higher interest for the assets. However, in some cases, dealers will not approve your agreement due to poor credit rating.

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Hire purchase remains one of the best financing options for businesses looking to finance assets. By choosing hire purchase, a company can acquire new assets and thus enhance productivity. In this article, we will discuss how hire business hire purchase works and the benefits and drawbacks of using it to expand your business.

What Is Business Hire Purchase?

Business hire purchase is a payment agreement where a business acquires an asset without paying the full amount upfront. The business makes a down payment, and it can be as low as 10 or 15% of the total cost. The business utilizes the asset while making payments in the form of monthly installments. This is a good option for a business looking to acquire an asset quickly. While the business acquires and uses the assets, legal ownership is only transferred when the total cost is paid to the dealer.

What Are the Pros of Using Hire Purchase for Business Expansion

As a business, the decision to acquire new assets through a hire purchase agreement has some benefits. Here are some of the benefits.

1.      Acquire Assets Without Upfront Payment

One of the biggest advantages of using a hire purchase agreement is that it allows you to acquire assets without paying a large upfront payment. Acquiring assets such as vehicles, electronics, and furniture in a cash payment can cause a strain on your cash flow. Businesses with limited capital or cash flow constraints will benefit greatly from a hire purchase arrangement.

2.      Spread the cost

Payment of assets in a hire purchase agreement is done in installments. Spreading the costs not only helps you manage the cash flow more effectively but also helps you make better financial planning and budgeting.

3.      Ownership at the end of the agreement

Hire purchase allows a business to retain assets at the end of the agreement by transferring title from the seller. Leasing is an alternative to hire purchase deals. However, in a lease agreement, the ownership of the asset remains with the dealer even at the end of the agreement. In a hire purchase deal, the hirer ends up owning the assets after the final payment.

4.      Flexible terms and repayment options

With a hire purchase agreement, a business has the chance to tailor the deal to suit their specific needs as well as financial circumstances.

Cons Of Using Hire Purchase for Business Expansion

The only downside of using hire purchase for business expansion is that the total costs is higher than in the case of a cash purchase. However, the many benefits of this financing option overshadow this drawback.

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Did you just come across a hire purchase deal? Are you wondering whether hire purchase is a viable way to purchase assets?

When you are a first-time buyer, hire purchase can be confusing. One must learn the pros and cons of this financing method before opting to sign an agreement. Here’s a guide to help you make the right choice.

What Is Hire Purchase?

Hire purchase is a financing arrangement where a buyer gets the chance to acquire costly assets such as vehicles, electronics, appliances, and furniture without paying the total cost upfront. As a buyer, to buy items on hire purchase, you only pay a fraction of the total cost as deposit and split the balance into installments. The installments are paid over a fixed period. During the period when one makes the payments, they have the right to possess the item and use it. However, you only become the legal owner after the final payment is made.

Benefits Of a Hire Purchase Agreement

There are numerous advantages of choosing a hire purchase agreement when purchasing assets. Here are some of these benefits.

1.      Budget-friendly

Hire purchase provides you the opportunity to spread the cost of assets over time. This not only makes the assets affordable, but it also allows you to work within your budget.

2.      Quick access to assets

In the case of a cash purchase, a buyer waits until they save enough to acquire assets. However, with a hire purchase, you acquire items immediately for your use and pay for them later.

3.      Ownership at the end of the hire purchase agreement

When one completes payments for the items they require, legal ownership is transferred to them. This provides you the freedom to use the items, sell or even trade them.

Cons Of A Hire Purchase Agreement

There are some disadvantages of hire purchase. It is also vital to consider them before opting to sign an agreement.

1)     Total cost is higher than a cash purchase

The final cost of an asset at the end of a hire purchase deal is higher in comparison to the cash price. The difference is brought about by interest charged on the installments. However, the benefits of spreading the cost overshadow the fact that the total cost is higher.

Kenya Credit Traders remains the best hire purchase dealer for household appliances and electronics. Visit our website here.

Hire purchase is gaining popularity among Kenyans looking to purchase household electronics. Previously, customers would be required to pay for items upfront to acquire them. This means that one has to work with their budget, even if it means settling for low-quality items. However, with the emergence of lipa pole pole electronics, customers now can afford a wide variety of electronics.

What Is Electronics Hire Purchase?

Electronics hire purchase deals involve paying a fraction of the total cost as a deposit and then spreading the balance into several months. If you are looking to acquire an AIWA 55″ smart TV or an Android TV, you will only need to pay 15% of the cost to KCT to take it home. The customer has up to 24 months to clear the balance.

Understanding The Cost Benefits of Electronics Hire Purchase

Hire purchase has benefits as well as limitations. One of the downsides of a hire purchase deal is that the total cost is higher than the cash price. The difference is brought about by the interest charged on the installments. While trying to understand the cost-benefit of electronics hire purchase, we will compare this limitation and other financial benefits of choosing a hire purchase deal.

While it is true that a buyer ends up paying more for the items than they would in a cash purchase, hire purchase allows them to spread the cost. The opportunity to spread the cost has several benefits. One such benefit is affordability. When you do not have to pay upfront for electronics, even the most expensive electronics become affordable. You do not have to settle for low-quality electronics.  Hire purchase allows you to acquire quality electronics and pay for them in installments.

Another reason why hire purchase remains a better choice is that it gives you control over your finances. If you only pay for items in cash, you are likely to have instances when you do not have savings. This will mean that you cannot even cater for an emergency. With hire purchase, you only pay a fraction of the cost every month, and you are left with cash to spend on other expenses.

Hire purchase is also a better option than leasing. Renting electronics means that you return them to the owner at the end of the agreement. However, with a hire purchase, you own the items upon paying the last installment.

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When it comes to acquiring electronics, not everyone has the cash to make upfront payments. The high cost of living, inflation, and high importation costs have played a part in making electronics expensive. However, this doesn’t mean that it is impossible to acquire electronics, considering that one can utilize a hire purchase deal.

Hire purchase for electronics are agreements that allow you to buy electronics and make payments over a set period in installments. To acquire electronics, the buyer pays a deposit, typically around 15%. Immediately after paying the deposit and signing the agreement, you take home the electronics for use. However, you do not become the owner. It is only after making regular payments, known as installments, that one becomes the owner. Until then, you are only renting the electronics from the dealer.

Why Choose Electronic Hire Purchase Deals

There are plenty of reasons to settle for an electronics hire purchase. Firstly, a hire purchase deal improves inclusivity and makes items affordable. The consumer doesn’t need to pay upfront to acquire items. This means that it is possible to acquire electronics that they would not have acquired if they were required to pay in cash.

Another benefit of electronics hire purchase is giving you control over finances and helping you manage your cash flow. A cash purchase can leave you without cash to spend on other needs. It can even deplete your savings. However, the hire purchase spreads the cost of the items. the repayments are fixed, making it easier for you to plan your finances.

How To Identify the Best Hire Purchase Options With KCT

A customer must take time to identify the best hire purchase option that works and suits their needs.

The number one consideration when selecting a hire purchase deal is the interest rate. One ends up paying this amount on top of the cash price. Interest rates vary from one dealer to the other. Always focus on finding a dealer with competitive rates, but this should not be the only consideration. Low-interest rates do not guarantee quality services.

Payment terms of the hire purchase plan are also part of the vital considerations. The payment terms determine how long one repays the cost of the electronics. The best hire purchase dealers offer flexible payment terms. This means that you can get a hire purchase deal tailored to suit your needs.

Additional fees are also part of the essential considerations. Some lenders charge application fees, late repayment fees, early repayment fees, and others. Always read the fine print before signing a hire purchase agreement.

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