Hire purchase remains one of the options for many customers who are evaluating financing options in modern times. It refers to a purchase agreement that allows a buyer to acquire items by only paying a fraction of product’s cost. It is similar to rent-to-own agreements. The buyer gets the chance to use the assets while paying for the total cost in installments. The chance to spread cost is the biggest benefit of hire purchase deals.
Consumer Behavior and Preference For Hire Purchase
Consumer behavior for hire purchase options is a process influenced by various aspects such as economic conditions, personal factors, and cultural influences among others. Hire purchase is a financial decision. It is thus essential to take time and evaluate options before one signs a hire purchase agreement. While making the decision to opt for a hire purchase deal, here are some of the factors likely to influence consumer preference on hire purchase.
· Personal factors
There are personal aspects that influence a customer’s buying behavior. The factors differ between customers, but here are some of the major ones.
1. Age
There is no doubt that age is a major influence on buying behaviors and hire purchase options. There is a major difference between what youths prefer in home electronics and what the elderly choose. It is likely that a youth prefers home entertainment items such as home theaters and smart TVs. On the other hand, a middle-aged person will be looking to furnish their home with quality household furniture and quality kitchen appliances.
2. Lifestyle
Lifestyle is also a major factor that influences consumer preference on hire purchase options. It is primarily how one opts to stay in the society. When one wants a lavish lifestyle, they will choose high-end furniture and top-notch appliances for their home.
3. Occupation
Your occupation not only determines your income but also your lifestyle. It also determines the number of hours you spend in your home. This, in turn, affects your decision making with regards to assets to acquire for your home on hire purchase terms.
· Economic Factors
Consumers’ buying habits are also heavily dependent on the economic situation in the country. A prosperous economy where there is enough money supply will lead to high purchasing power for consumers.
1) Personal income
The amount a consumer has as disposable income will determine their decisions. When one has enough income to make a cash purchase, they will likely avoid a hire purchase agreement. On the other hand, when the disposable income is low, the customer will adopt hire purchase and spread the cost.
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