Hire purchase is one of the best ways to acquire high-cost assets. At times, one might not have enough money to make a cash purchase. This is especially true in modern times where inflation and the high cost of living are affecting Kenyans across all sectors, making it harder to make savings. Hire purchase agreements allow you to acquire assets and pay for them later.
Hire purchase contracts are credit agreements. They allow you to acquire items that you need at a fraction of the total cost. Kenya Credit Traders, a leading hire purchase provider in Kenya requires as little as 10% of the total cost of an asset before one acquires it. The hirer can clear the balance in installments, allowing them to spread the cost.
Before opting for hire purchase agreements, there are several aspects you need to know.
What to know when signing a hire purchase contract
· You have the right to end a hire purchase contract at any time
It is always desirable to understand your rights as well as duties when signing a hire purchase agreement. Always invest effort and time reading the hire purchase contract before signing it. One of the rights the hirer has is the right to purchase the hire purchase agreement at any time.
When you acquire the assets, before you make all the payments, you are considered to be hiring the assets. You do not own them. In a case where you no longer need the assets, you can end the agreement and return the asset to the dealer.
· You only own the items after making the final payment
One of the benefits of hire purchase agreements is that you acquire the assets at just a fraction of the total cost. You are authorized to use the asset immediately paying the down payment. However, ownership of the asset is only transferred to the buyer after making the final payment. This means that you cannot sell the item during the repayment period. Any transaction involving the asset can only be authorized by the hire purchase company during the repayment period.
· The dealer can repossess the asset when you don’t keep up with payments
Since the dealer remains the owner of the assets, they have a right to repossess the items when the hirer fails to make payments. It is always advisable to settle for a repayment contract that works for you depending on your income.