Hire purchase is one of the financial services that has stood the test of time. It is a purchase agreement that allows buyers to initially hire assets and end up owning them. Unlike a cash purchase where one makes payment upfront, in a hire purchase, you only need a small fraction of the cost to acquire assets. The initial payment is a deposit or a downpayment. One takes home the asset and has the right to use the asset. During this period, they are considered to hire the assets, until when they make the total payment. To achieve the goal, the balance is spread into equal amounts known as installments.
Why Consider a Hire Purchase Agreement
There are plenty of benefits of acquiring items for your business or home through a hire purchase agreement. The primary benefit of hire purchase is spreading the cost. A hire purchase contract is similar to a rent-to-own agreement. This means that you will be hiring the assets but end up as the owner. One meets the total cost through installments. These are manageable and affordable payments. You will only pay a small fraction of the cost every month. This leaves you with to spend on other activities, bills, and items.
Another reason to buy items on hire purchase terms is that you will own items at the end of the agreement. When you make the last payment, the dealer transfers the title.
Hire purchase interest rates are also favorable. Other options for financing including term loans come with high interest rates. With hire purchase, the interest rate is fixed. This means that the total cost does not change even when base lending rates are changed by the Central Bank.
Hire Purchase Accessibility
One of the reasons why hire purchase remains relevant is that it promotes financial inclusion. It is a financial product that is accessible to people of different social classes. Traditional loans rely on data and score credits to evaluate whether or not one qualifies for a loan.
On the other hand, hire purchase does not rely on your credit score. The assets that one acquires are the collateral in this financing. Hire purchase payments are also flexible. One signs a contract that suits their financial status or income. Kenya Credit Traders ensures hire purchase accessibility by providing a wide variety of assets on hire purchase items. Check our website to find out items available in our stores on hire purchase terms.
