Hire purchase as a financing option is becoming popular among business owners as well as consumers. There is an increase in the range of items one can acquire on hire purchase terms. This includes laptops, mobile phones, smart TVs, household furniture, motorcycles, and even vehicles. It is even possible to acquire land through a hire purchase arrangement.
How Hire Purchase Works
Hire purchase deals offer an alternative to a buyer without enough funds to acquire an asset on a cash purchase. It removes the need to pay all the money upfront. On the contrary, the buyer pays a small fraction of the cost as a down payment. This can be as little as 10% of the total cost. The remaining balance is then split into regular payments. In Kenya, installments can be paid daily, weekly, or monthly, considering that a hire purchase contract is tailored to meet the needs of the buyer.
Hire Purchase Myths and Truths Behind Them
There are Kenyans yet to embrace hire purchase agreements. This is partly due to the myths spread about hire purchase agreements and how they work. In this post, we will talk about these myths and also paint the true picture of the hire purchase agreements.
1. Hire purchase agreements are complicated
Most people cite the complex nature of the hire purchase agreements as a reason to avoid them. However, hire purchase agreements are straightforward and the process has been streamlined through advancement in technology. One can easily read and understand the hire purchase terms and conditions before they sign the agreement. The information that you require to present to the hire purchase dealer is basic, such as proof of income, identification documents, and residence. Some will not even need to check your credit score to approve the hire purchase deal. This makes the whole process hassle-free and you can have the deal approved in less than 24 hours.
2. Hire purchase is expensive
Another reason buyers avoid hire purchases is the fear that they will end up paying more for an asset. However, while the cost may be higher in comparison to a cash purchase, a hire purchase gives you value for money. You will be using the asset while still paying for it. In some cases, the buyer can return the assets to the dealer if they no longer need it or when they feel they cannot afford it. The best part is that you will fully own the asset after the last installment, giving you the freedom to sell, trade, or do anything else with the items.
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