When in the market to acquire assets for a business or your home, you will be keen to determine the payment options available to you. One will want to find out the best financing options they can utilize. When you do not have all the cash to purchase items outright, here are some of the options available for you.
Leasing involves hiring a particular asset that you require from a dealer or the owner. Leasing agreements require one to make periodic payments to the owner of the assets. The installments can be monthly, biweekly or even annually depending on the value of the asset. At the end of the leasing contract, one returns the assets to the dealer or owner. This is a great option when you do not intend to retain a particular asset in the long run.
One can also consider turning to loan products when they need to acquire assets. There are plenty of loan products from lending institutions that one can turn to when they require financing. In the case of household items, one can even turn to online lenders to find money and finance acquiring the assets that they require.
One of the downsides of term loans when one is looking for financing is that they charge high interest rates. In most cases, interest rates can also change and increase the total cost of the asset you are purchasing.
Another downside of term loans is that they are affected by your credit history. When one has bad credit, they are likely to pay higher interest rates. It is the same case for persons with limited credit history. The high interest rates only increase the total cost of the assets.
Hire purchase agreements are also part of the options one can utilize when looking to purchase high-value assets. Hire purchase agreements allow you to only pay a fraction of the total cost of the asset you intend to purchase to acquire it. After acquiring the asset one is allowed to utilize it while making periodic payments known as installments to the dealer. After one makes the last payment, the ownership of the assets is transferred to them.
Hire Purchase for Limited Credit Histories
When you have limited credit history, hire purchase is one of the best options for purchasing new assets. In hire purchase agreements, the goods one hire work as the security or collateral since one is not the owner. In case one does not honor the payments, the dealer can repossess the goods. Even the buyer can opt to end the hire purchase agreement if they are unable to make repayments. This means that your credit history is not one of the major considerations by the hire purchase dealer before approving the agreement.