Are you planning to purchase items on hire purchase terms? Are you wondering how to manage your finances with hire purchase?
Hire purchase agreements remain one of the most favorable financing options in modern times. When purchasing high-ticket items such as home entertainment devices, kitchen appliances, household furniture, or other items, an outright purchase might be out of reach. However, choosing hire purchase as a financing option allows you to split the cost and pay over several months.
How Hire Purchase Works
Hire purchase financing involves finding a hire purchase dealer selling the items you require. It is worth noting that not all shops accept hire purchase agreements. However, there are dealers such as Kenya Credit Traders that sell almost all household items on hire purchase terms. When you sign a hire purchase deal, you pay a down payment to the dealer and take home the assets you intend to own. However, you do not immediately acquire ownership of the items. The title is only transferred by your hire purchase dealer after the completion of all the installments.
Managing Your Finances with Hire Purchase
Hire purchase allows you to have better management of finances than any other financing option. Firstly, hire purchase allows you to acquire items without purchasing them outright. This means that you only pay a fraction of the total cost. You do not have to deplete your savings to buy household appliances. With hire purchase, you will only pay a fraction and clear the balance in installments.
Secondly, hire purchase deals come with fixed interest rates. This means that the amount one pays as installments does not change throughout the hire purchase agreement. Therefore, it is easier for one to budget and make financial planning when they choose hire purchase considering that installments remain consistent.
Repayment flexibility is also one of the vital reasons to opt for a hire purchase deal. When signing the hire purchase deal, you will have the flexibility to choose the duration of the agreement. This flexibility ensures that you can adjust the monthly payments to suit your income as well as your financial situation.
Hire purchase also ensures that you have enough amount to make savings every month. Businesses that choose hire purchase deals to acquire assets will have a favorable cash flow. Paying only a fraction of the cost every month means you are left with money to spend on other expenses.
