When looking to add some assets to your home or business, you will want to find out the best deals. Apart from focusing on the quality of products and services, it is also vital to learn the payment options that are available. Some payment options that you can utilize include cash payments, loans, and hire purchases. Hire purchase is quickly gaining popularity in Kenya, in the form of Lipa mdogo mdogo.
What is a hire purchase?
Hire purchase is a payment option available for buyers that do not have all the cash to pay for particular items upfront. Some essential assets that we use in our homes such as gas cookers, dining sets, mahogany beds, refrigerators, and TVs might be costly. However, one doesn’t have to wait until they save all the cash before they make a purchase. Hire purchase allows you to buy such items by paying just a fraction of the total cost. One can clear the balance in the form of monthly installments.
Principles guiding hire purchase
- In any given hire purchase agreement, the owner, or the seller, hires goods to the hirer with an option to buy when they pay a given amount of cash.
- In hire purchase, the buyers that do not have all the cash to buy a given asset have the chance to acquire the items after paying an initial amount. This down payment is known as a premium. After making this payment, you will acquire the assets for use. The balance is cleared in the form of monthly payments.
- After one pays all the monthly payments, they acquire full ownership of the assets. During the period when one is still making payments, the items belong to the seller. However, you acquire the title after you make the last payment.
- The seller has the right to repossess the items in a case where the buyer doesn’t honor the agreement. If this is a result of one not paying the installments, they end up losing even the cash they have paid upfront. Before you sign the hire purchase agreement, take your time and understand the terms and conditions. This helps you understand the conditions under which the agreement can be terminated.
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