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:
- ID proof
- Address proof
- Income proof
- A form requesting a hire purchase transfer