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.


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.


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.


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.