Hire purchase remains one of the best financing options when looking to acquire high-value assets. Businesses turn to hire purchase agreements when purchasing equipment, cars, and other essential assets. Individuals also turn to hire purchases when looking for high-value items for a home such as furniture, kitchen appliances, electronics, cars, and others.
In Kenya, hire purchase dealers have different terms for this payment arrangement. Lipa later, lipa mdogo mdogo, or lipa pole pole are some of the names for hire purchase contracts. This payment option involves making a down payment for the items one requires and clearing the balance plus interest in installments. Installments can be daily, weekly, or monthly payments.
Best Approach for Negotiating Hire Purchase Terms
Whenever one is in the market for any purchase, they will be eager to get the best deal. Basically, the best deal is one that saves you money. However, with hire purchase, there is more than just the total cost. Here are some useful tips for getting the best hire purchase deals.
- Invest effort and time learning about hire purchase. There is a need to understand as much as you can about hire purchase before signing any agreement. This will help ensure that you only make the right decision when signing a contract.
- Look for the best interest rates. The interest rates determine the total cost of the items you are purchasing. One thus needs to find out the best annual percentage rate to keep the cost as low as possible.
- Keep the total cost in mind. At times, a buyer can be enticed by low monthly repayments. However, this will only work to add up the total cost of the assets. If possible, one should consider a high amount as the down payment and a few installments. This will help you lower the overall cost.
- Do not be afraid to bargain. It is not just the total cost of the items that one can bargain with, but also the interest rates. Getting the lowest interest rates will in turn lead to low total cost. One can also haggle over the downpayment and other fees.
- Try different dealers. It is essential to compare deals from different hire purchase traders when looking to purchase assets. There are plenty of hire purchase traders, and every dealer will offer a different deal. Apart from checking the contract, also check the reputation of the traders before choosing to purchase assets from them.
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