When running a small business, one will be keen to find out financing options available to them. Financing helps a small business acquire quality assets and equipment. Investing in assets and equipment aims at enhancing the productivity of the small business.
You will always have options when determining financing options to utilize for your small business. However, each financing option comes with benefits and disadvantages too. It is thus desirable to check out different options available to you. This will help you find the best choice that saves you money in the long run.
Hire Purchase For Small Business
One of the best financing options small businesses can adopt is hire purchase. Hire purchase contracts are purchase agreements where a buyer pays a fraction of the asset’s cost as a deposit and clears the balance in installments. In modern days, there’s a wide variety of assets available on hire purchase terms. A small business looking for furniture, electronic gadgets, appliances, and other assets can acquire them from a hire purchase dealer such as Kenya Credit Traders. It is also possible to acquire equipment and building materials on hire purchase terms.
Hire Purchase Contract Guide
If you are looking to sign a hire purchase contract, there are some essential factors to check. First, it is important to understand the features of a hire purchase contract.
Features Of A Hire Purchase Contract
A hire purchase agreement involves payment of a down payment. This is a fraction of the total cost sometimes as low as 10% of the total cost. After the business pays the deposit, they can take and use the assets.
The ownership title for the equipment or materials remains with the seller throughout the hire purchase contract. However, the seller transfers ownership when the buyer completes payment of the installments.
Payment for the assets is made in installments. This is a fixed amount paid daily, weekly, or monthly, depending on the specifications of the hire purchase agreement. The installments attract interest. This makes the total cost higher than in the case of a cash purchase.
Benefits Of Purchasing Light Equipment and Building Materials on Hire Purchase Terms
One of the reasons a small business should opt for hire purchase is the chance to spread the cost. Hire purchase allows the business to divide the cost over a duration. This makes hire purchase affordable.
A business using hire purchase pays a fraction of the cost every month. This helps the business owner to manage cash flow. The business will have finances to cater for other expenditures.
Follow Kenya Credit Traders on Facebook.
