With hire purchase becoming a convenient way to acquire assets in Kenya, one might want to join the many buyers that adopting this payment strategy. However, just like any other decision, it is vital to check the pros and cons and ensure you make the right decision. You want to ensure you are getting the best deal when selecting to purchase items on hire purchase. Here are steps or ways to get started with hire purchase.

1.      Step 1: Determine the assets you intend to purchase

Before you even start the process of venturing the market to find out about hire purchase, there is a need to determine what assets you intend to purchase. The convenience of hire purchase at times can lead to impulse buying. One might be tempted to purchase assets that they do not require. Always have in mind items that you need to purchase.

2.      Step 2: Determine the best payment method

While hire purchase is one of the best ways to acquire items, it is not always the best. One ought to learn other financing options. If you can purchase an asset outright without affecting cash flow or income, you might not require hire purchase. Invest effort and time learning pros and cons of different payment methods and learn the best one for the assets you are looking to purchase.

3.      Step 3: Learn about hire purchase

It is always advisable to spend some effort and learn how hire purchase works. It is vital to learn your rights and duties as the borrower. Also learn about interest rates, installments, and other factors that affect cost in hire purchase. You also learn circumstances under which the item can be repossessed by the owner. Find articles about hire purchase here.

4.      Step 4: Find a reliable hire purchase company

After determining that hire purchase is the best payment strategy for the assets you require, it is time to find the best dealer. In modern times, the internet offers the quickest way to find a hire purchase company. However, word of mouth from a friend or relative can lead you to a reliable hire purchase company.

Do not settle for the first hire purchase company you come across. Take time and compare the hire purchase deals from different dealers to find the best one. Check ratings and reviews from their customers to check whether they are reliable.

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In Kenya hire purchase is quickly becoming a favorite way to pay for items. There are plenty of items one can acquire using hire purchase. In the past, hire purchase financing was only associated with high-value assets such as cars and homes. However, the scope has changed in recent times. There are plenty of assets you can acquire and pay using hire purchase method.

The rise of hire purchase in Kenya

Whenever one is looking for any asset, there is no doubt that affordability is one of the aspects they keep in mind. Whenever one chooses to pay for an asset outright, it would mean they have to raise the full amount. This is not possible at all times. There are some assets that are necessary for our homes, offices and even businesses. When you cannot acquire such assets outright, you can only resort to leasing them, taking a loan, or utilizing hire purchase.

The number of people choosing this method has increased as a result of assets available on hire purchase. Unlike in the past, even assets that don’t cost as much are now available on hire purchase terms. You can purchase a blender, a smartphone, a laptop, a boda boda, or even pieces of furniture to furnish your home using hire purchase.

Reasons behind hire purchase rule over cash

Hire purchase is quickly replacing cash purchase for different assets in Kenya. The many benefits that come with hire purchase are the reason behind most people switching from cash purchase. Here are some of these benefits.

·         Buy now pay later effect

Unlike in cash purchases, hire purchases allow you to purchase assets that you cannot afford to purchase outright. Dealers, such as Kenya Credit Traders, will only require you to pay a deposit for the asset. Immediately after paying the deposit, you acquire the asset for use, while you clear the balance in installments.

·         Convenient payment methods

Hire purchase offers convenience when you adopt it as a payment strategy for items you require. When clearing the balance, you can choose to pay in daily, weekly, or monthly installments. Most companies have adopted digital payment methods such as M-pesa to make payments easier. You do not have to visit the dealers store with cash to make payments.

·         A wide variety of assets

Another reason why hire purchase rules over cash is the many items available on hire purchase. Companies that offer hire purchase financing have a wide variety of assets you can acquire for use in your home or business. Visit Kenya Credit stores to view household items you can acquire and pay in hire purchase terms.

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A hire purchase contract is a financing or credit agreement. It is one of the popular ways to purchase expensive items where you acquire the products and make payments later in the form of installments until the full cost is paid off. In Kenya, hire purchase agreements are duped lipa mdogo mdogo or lipa pole pole. It is becoming a favorite way to purchase assets such as TVs, phones, appliances, electronics and even high value assets such as cars and houses.

Hire purchase as an alternative to leasing

Leasing means renting an asset for a given period. At the end of the contract, you will return the asset to the owner. Hire purchase allows you to hire assets for use, and at the end of the contract, you become the owner.

Ways Hire Purchase Offers You a Better Financial Deal

There are plenty of benefits you enjoy by opting for hire purchase for financing your assets. Here are some hire purchase financial breathers.

Access quality products

Are you looking to upgrade the TV in your home? Do you need a quality dining set for your new home? At times, you can find the cost of upgrading your assets enormous. However, hire purchase allows you to acquire these products by paying a fraction of the total cost. Even when you do not have all the cash, you can purchase quality products and clear the balance in the form of installments.

Improved cash flow

High-value assets can come with adverse impact on your finances if you choose to purchase them outright. They can deplete your savings, salary and at times leave you with loans to pay. Hire purchase allows you to manage your cash flow, since you make payments according to frequency of your income.

Lower interest rates

The difference between hire purchase and cash purchase is interest charged. Hire purchase will cost you more than a cash purchase. However, the rates charged in hire purchase are considerably lower when compared to credit cards, overdrafts, term loans and other credit arrangements. The best part is that hire purchase payments are fixed and interest rates are not subject to change as is the case with term loans.

Repayment flexibility

Another hire purchase financial breather is the flexibility one enjoys by choosing hire purchase. One can choose whether to pay their installments daily, weekly, monthly or even annually depending on the assets they are purchasing.

Learn more about hire purchase agreements on our blog. Find the best hire purchase deal by following Kenya credit traders on Facebook.

When out to add assets to your home or business, you will learn that hire purchase is one of the best ways to pay for the assets. There are plenty of benefits that come with hire purchase. This has made it a popular mode of payment for high value assets.

In Kenya, hire purchase is becoming a preferred payment strategy for even items that people used to purchase outright in the past. You can purchase mobile phones, TVs, kitchen appliances, electronics and even furniture using hire purchase. Visit Kenya Credit Traders website for a broad range of assets you can acquire on hire purchase terms.

Is Hire Purchase the Right Option?

While hire purchase is one of the best ways to pay for assets, it is not the only choice. Here is a check list to help you decide whether to settle for a hire purchase.

·         Hire purchase, leasing or a term loan

When you do not have all the cash to spend on a given asset and purchase it outright, these are the three main options. A term loan will need you to seek a loan from a lending institution. Leasing on the other hand is the best choice if you do not plan to retain the asset. With leasing, you are required to return the asset at the end of the lease contract. Hire purchase on the other hand allows you to own the asset at the end of the hire purchase contract.

·         Are you suitable for hire purchase?

Before signing for a hire purchase agreement, one needs to ensure they are capable of making payments. In most cases, the hire purchase dealer requires you to bring proof of steady source of income. You need to prove that you can pay your installments. Failure to honor the agreement will see the hire purchase company repossess the assets.

·         Understanding the hire purchase agreement

Before signing a hire purchase contract, there is a need to ensure you understand the hire purchase agreement terms. This helps you learn your rights as well as duties. Check this article to learn characteristics of a hire purchase contract.

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When looking to add assets to your home or business, you will have different financing options you can utilize. Lipa mdogo mdogo, or hire purchase, has become a popular payment option among Kenyans. From high value assets such as cars and homes to mobile phones and TVs, there are many products available on hire purchase terms. However, before opting for a hire purchase, there is a need to invest effort and time learning about this payment method. Here are some popular expectations among buyers and the reality about hire purchase agreements.

Hire purchase expectations vs reality

1.      Expectation: hire purchase price is the same as the cash price

When customers opt to purchase assets using a hire purchase agreement, it is a requirement of the law for the dealer to indicate the cash price of the asset. The dealer is also expected to outline the hire purchase price of the same asset. Most customers expect that the cash price is the same as the hire purchase cost.

Reality:

Hire purchase cost is usually higher than the cash price for the same asset. Hire purchase involves hiring an asset with an option to purchase in the future. You will be paying hiring charges in the form of installments. This attracts interest which adds to the cost of the assets, making total hire purchase price higher than the cash price.

2.      Expectation: one becomes the owner immediately they acquire the assets

With hire purchase, one acquires the assets without having paid fully for them. After paying the down payment, which may be as low as 10% of the total cost, you acquire the assets and you are free to use them. One might feel they are the owner after acquiring the asset.

Reality:

You only become the owner of the asset by exercising the option to purchase the assets. This requires the buyer to pay all the installments. When one has not made all payments, they cannot sell, transfer or mortgage the assets since they are not the owners.

3.      Expectation: cash purchase is better than hire purchase

The fact that hire purchase price is higher than the cash purchase might make a buyer feel that purchasing in cash is the better deal. With high value assets, purchasing in cash might mean a disruption in your cash flow. You might use all your savings and end up with no cash to use for other activities or even an emergency.

Reality:

Hire purchase has so many benefits that even eclipse the interest charged. You can maintain your cash flow by ensuring that you make payments monthly, daily or weekly. This is a convenient way to pay for an asset. You also have the right to cancel the agreement at any given time if you do not want to own the asset. Check the many benefits of hire purchase here.

Get the best hire purchase deals on electronics, furniture, and kitchen appliances here.

Definition of hire purchase

Hire purchase is defined as a credit agreement or financing method that allows you to hire assets and purchase them on a future date. Businesses, as well as individuals, can benefit from a hire purchase. Most businesses resort to hire purchase when looking to acquire high value machinery which they intend to own. A hire purchase is considered favorable when compared to a lease agreement. In the case of a lease, one doesn’t become the owner of the assets. However, with hire purchase, you will become the owner of the asset after making the last payment.

Nature of hire purchase

Before one signs a hire purchase contract, it is always advisable to invest effort and time learning the nature of hire purchase agreements. This ensures that the hirer makes an informed decision. Here are some main characteristics of hire purchase finance.

·         Ownership of the assets

As the hire purchaser, you only become the owner of the asset after paying the last installment. While you acquire the assets for use immediately after paying the deposit, the dealer remains the owner of the assets until you complete payment of the installments. One cannot pledge, mortgage, transfer or resell the asset without authorization of the hire purchase dealer.

·         Payments for the asset

When out to purchase an asset on hire purchase terms, one makes an initial payment. This down payment is usually about 10% of the total value of the asset. Afterwards one clears the remaining balance in the form of installments. The frequency of this installments can be daily, weekly, monthly, half-yearly or annually, depending on the value of the assets. Every installment that one pays is treated as a hire charge for the asset.

·         Termination of the agreement

At the end of the hire purchase agreement, when the hirer pays the last installment, they become the owner of the assets. However, if you do not plan to own the assets, you can return them any time to the seller, and you will not be required to pay any further installments. The owner might also repossess the assets when you fail to make the payments as outlined in the hire purchase agreement. In any case where the assets or goods are returned to the dealer, the hirer cannot claim back any payments from the dealer as the payments were treated as charges towards hiring and use of the asset.

Learn more about hire purchase agreements on our blog page. Also get the best hire purchase deals in Kenya by visiting our page, Kenya Credit Traders.

Hire purchase is one of the best payment methods one can adopt for high value assets. It is a credit agreement that allows you to acquire such assets after paying a deposit which is usually a fraction of the total cost. You are allowed to clear the remaining balance in installments.

Ownership in Hire Purchase Agreements

Hire purchase allows a hirer to acquire assets immediately even when they do not have all the money. You obtain the assets for your use after paying a down payment. This may be as little as 10% of the total cost of the assets you intend to purchase. However, you do not become the owner of the assets until you pay all the installments. Whether it is a car, furniture, laptops or even televisions, you only acquire the title after paying the last installment.

Transfer of Title In Hire Purchase

Under the principles of hire purchase, the hirer only obtains title for the assets when they make the final payment. Until then, the seller remains the owner of the assets and retains the title. It is there not possible for the hirer to resell or transfer the assets to another person.

Hire purchase transfer

If you want to sell an asset while still paying the installments, it might be a tough process, but it is not impossible. In most cases, the hirer will be required to pay for the assets before reselling to another person. However, if one cannot make the payment, some hire purchase companies allow for hire purchase transfer. When you transfer the hire purchase agreement to another person, it also means you are surrendering ownership to them.

Hire purchase transfer process

1.      Check the agreement

Not all hire purchase contracts allow for hire purchase transfer. It is thus vital to check the agreement to determine if it is possible to transfer the agreement to another person. If the agreement is not clear about the process, it is advisable to contact the hire purchase dealer and get clarification on the same.

2.      Find a potential borrower

You will require finding a person ready to take on the hire purchase and ownership of the assets. Most people are not interested in taking up a hire purchase half-way, and this means you might need to make a good offer.

3.      Check their credibility

The hire purchase dealer is unlikely to approve hire purchase transfer unless they are confident that the new hirer can manage the payments. The new borrower should thus have the same qualifications as the ones you presented to the hire purchase company. They should provide proof of steady source of income.

4.      Submitting documents

A hire purchase company can only authorize the transfer after the borrower submits their documents. This may include:

1. ID proof
2. Address proof
3. Income proof
4. A form requesting a hire purchase transfer

Find more educative articles about hire purchase on our blog. Visit and follow our Facebook page, Kenya Credit Traders.

Hire purchase is quickly becoming a preferred payment method for assets in Kenya. It is possible to purchase almost any asset even when you do not have all the cash to make an outright purchase. There is an increase in the number of consumers utilizing this option to purchase assets.

What is a hire purchase?

This is a method for buying expensive consumer items where one makes a down payment and clears the balance over a period of time. The price of items in hire purchase might be higher than purchasing outright due to interest charged. However, the many benefits that hire purchase offer eclipse the extra cost. Check this article to learn some of the benefits of hire purchase.

Hire purchase in Kenya

In the past, most people have associated hire purchase with high value items such as cars and land. However, in recent times, even personal or consumer items are available on hire purchase. Lipa mdogo mdogo TVs, smartphones, refrigerators, furniture and blenders are just some of the items available on hire purchase. This is a convenient way to acquire such assets for your home or business.

Hire purchase companies

Not every company accepts a hire purchase form of payment for their assets. It is thus vital to focus on finding a reliable company selling goods on hire purchase terms. Different hire purchase companies do not offer the same quality of services. It is thus vital to keep the following in mind when looking for one.

·         Licensing

Hire purchase in Kenya is regulated by the hire purchase act. One of the requirements for a company to sell on hire purchase is seeking licensing from the government. Before transacting with any given company, there is need to check if they are authorized to offer hire purchase deals.

·         Reputation

Before choosing a hire purchase dealer, there is a need to learn if they are reliable. While online shopping is a convenient way to shop, it is also possible to land in the hands of scammers. Check reviews and ratings from customers that have purchased from a given hire purchase company before choosing it. It is also advisable to seek referrals from friends or relatives who have purchased assets using a hire purchase agreement.

·         Longevity

The number of years a hire purchase company have been in the market is also a crucial consideration before choosing them. You are likely to enjoy quality services if you select a company that has been around for some years.

Follow Kenya Credit Traders on Facebook to learn more about hire purchase products.

With hire purchase, also known as lipa pole pole or lipa mdogo mdogo, quickly becoming a favorite way to make payments, one might be eager to learn what it entails. Here we answer some of the frequently asked questions about hire purchase in Kenya.

1.      What is hire purchase?

Hire purchase is a credit agreement that allows a buyer to acquire high value assets and make payments in the form of regular installments. One acquires the assets after they make an initial payment known as down payment but only become the owner after paying the total cost.

2.      Are there laws governing hire purchase in Kenya?

Hire purchase agreements are governed by The Hire Purchase Act 507 of the laws of Kenya. This is a law designed to regulate hire purchase agreements. It also outlines the process of issuance of hire purchase business licenses. These law also protects the parties involved in a hire purchase agreement.

3.      What is a hire purchase agreement?

It is a contract between the seller and the buyer for the bailment of goods. It outlines the rights of the buyer and the seller among other features. The agreement states the cash price of the assets and the hire purchase price.

Check the features of a hire purchase agreement here.

4.      Is hire purchase leasing?

There is a difference between hire purchase and leasing. In hire purchase, one becomes the owner on paying the last installment. In the case of leasing, the hirer does not become the owner at any given point.

5.      What happens at the end of the agreement?

When one makes payment for the last installment they become the owner of the assets. While one acquires the goods immediately after making the down payment, they only become the owners after making the last payment.

6.      Under what circumstances can the hirer lose the goods?

There are several instances under which the seller is allowed to repossess the goods. One of the reasons for repossessing goods is defaulting payments. When you do not make the necessary payments, they not only lose the goods to the seller, but also any payments they had made.

Check our blog page to learn more about hire purchase in Kenya. Also, Follow Kenya Credit Traders on Facebook for latest hire purchase deals.

We require a variety of assets for our day to day activities in our homes or business. Determining the assets that we require might not be hardest task when compared to purchasing. When in the market to find the assets, you not only need to find the best dealers, but you also want to get the best deals. In modern times, there is increasing demand for hire purchase deals.

What is hire purchase?

Hire purchase is a form of credit agreement that allows you to hire high value assets such as cars, televisions, laptops or furniture and make payments in installments. In such cases, one acquires the items for use immediately after making the first payment. This payment is usually as low as 10% of the total cost of the item. However, one doesn’t become the owner of the item until they make the last payment. After paying the last installment, the title is transferred to the hirer.

Where to buy on hire purchase

In Kenya, hire purchase is becoming a favorite way to make payments for assets. Dubbed lipa mdogo mdogo or lipa pole pole, most people have adopted this payment mode for assets. However, not all the dealers have adopted this method of payment. Here are some ideas to help you find hire purchase dealers.

Finding hire purchase deals online

Most leading hire purchase dealers have websites available online. These companies acknowledge the increasing number of internet users. It is easy to find hire purchase dealers online. A simple search can for the assets helps you locate dealers available online. If you are looking to add furniture for your home, you can just search ‘Furniture on hire purchase in Kenya’.

Word of mouth is also one of the ways to find a reliable hire purchase company in Kenya. If you have a friend, colleague or relative that acquired assets through hire purchase, they can help you acquire similar assets by recommending a hire purchase company that gave them the best shopping experience.

What to keep in mind when buying on hire purchase

Not every company offers quality services when you utilize them. It is thus vital to check the reputation of the hire purchase company you are about to settle for. A company getting high rating from their customers is the best bet. One also needs to find a company that has been around for some years.

Find a wide variety of assets such as dining sets, Mahogany beds, TVs and refrigerators available on hire purchase on our website. Also, follow us on Facebook, Kenya Credit Traders.