Financing options in Kenya
Financing is always one of the primary considerations when one is in the market to find new assets. In the case of businesses looking to add new equipment, there are numerous financing options they can settle for. It is the same case for homeowners looking to buy new items to furnish their homes. Term loans, leasing, cash purchase, and hire purchase are some of the financing choices to select from. However, each of these payment modes has advantages and disadvantages. The decision on the ideal financing mode to select depends on a variety of factors. In this post, we will discuss hire purchase financing in Kenya.
What Is Hire Purchase?
Hire purchase is a financing option that allows you to split the cost of a particular asset over a given duration. The seller provides the buyer with the items once they make the down payment. This is usually a small fraction of the total cost of the goods. The rest of the cost is paid in form of monthly installments. Unlike leasing, one automatically becomes the owner after they complete payments.
Hire Purchase In Kenya
Hire-purchase agreements are common in Kenya. The agreements are governed by the hire purchase Act, Cap 507. This mode of financing has been around for some time now.
In the past, hire purchase was only popular among businesses or individuals investing in high-value assets such as machinery, cars, or even real estate property. However, in modern times, there are a variety of assets available on hire purchase.
It is possible to acquire smartphones, TVs, kitchen appliances, furniture, or electronic appliances through a hire purchase contract. Leading dealers such as Kenya Credit Traders Limited make the process of acquiring new assets for your home easier.
Why Settle for Hire Purchase Agreements
There are plenty of reasons to settle for hire purchase agreements. One such benefit is that hire purchase has reasonable interest rates when compared to exploitive bank loans. Unlike leasing, you will have the title or ownership of the items transferred to you when you pay all the installments. The ability to split the cost over a long duration, at times up to 5 years, means that you do not have to feel the pinch on your cash flow.