A hire purchase agreement is a credit contract between a buyer and seller. A hire purchase deal aims to allow homeowners or business owners to acquire assets on credit and pay the total cost in installments. These contracts are similar to rent-to-own agreements. The dealer transfers the title to the buyer after the final payment. Hire purchase is the best option for individuals with poor credit ratings. Hire purchase offers favorable interest rates. The installments are fixed allowing you to plan and manage your finances.

Legalities Guide on Hire Purchase Agreements

It is important to learn the guidelines provided in the law when signing a hire purchase agreement. The first question about hire purchase legalities is determining whether hire purchase is legal.

In Kenya, hire purchase is legal and thus an accepted payment method for assets. The Hire Purchase Act provides guidelines on hire purchase deals in Kenya. It is thus within the law to hire items from licensed dealers in Kenya and pay for the assets on hire purchase terms.

Legal aspects of hire purchase deals

For a hire purchase agreement to be legally enforceable, it must include several details.

  1. The name and address of the buyer and the seller: Both parties provide information about their address in the hire purchase agreement before signing it.
  2. The date of the hire purchase agreement: A hire purchase contract must indicate the date the agreement was signed by both parties. In most cases, this is also the date when the buyer acquires the items from the dealer.
  3. The items in question: A legal hire purchase agreement also indicates the items that the hirer acquires from the seller. The agreement should include a proper description of the items.
  4. The cost of the items: The seller is to disclose the costs to the buyer before signing the hire purchase agreement. In some cases, this includes the cash purchase price. The amount to be paid in each installment also needs to be indicated in the agreement. The agreement should also specify the final cost of the assets.
  5. The payment dates for each installment and any other charges also ought to be indicated on the agreement.
  6. It is also a requirement to indicate any additional fees and charges.
  7. It is also important to check whether the agreement specifies the withdrawal period. This is the duration within which the buyer can vacate the agreement.

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