A hire purchase agreement or contract is a credit agreement. The buyer hires items such as dining sets, double door refrigerators, and mobile phones, among others from credit dealers such as Kenya Credit Traders.
In most cases, such products might be expensive for one to pay upfront. Hire purchase thus offers them the chance to acquire the products by just paying a fraction of the total cost as a down payment. Afterward, one clears the balance in periodic installments. This can be in the form of daily, weekly, or monthly payments. Hire purchase, or Lipa mdogo mdogo, is slowly becoming a popular payment method.
Contents of the hire purchase agreements
- Most of the hire purchase contracts will have terms and definitions as used in the contract. This helps you understand the contents of the agreement before signing.
- The duties of both the seller and buyer are also specified in the hire purchase agreements. This includes the disclosure of crucial information by both parties.
- The rights of the seller and the buyer are also part of the hire purchase agreement. Both parties have their rights, and it is essential to understand them before you sign any hire purchase agreement.
- Payments and penalties are also part of the hire purchase agreement. The costs of the products as well as the interest charged ought to be part of the contract. One also learns penalties they incur as a result of breaching the contracts. This will include late payments or lack of payments.
- The exchange of notices information is included in the contract. Both parties will need to issue notices whenever they need to terminate the contract. It is also possible to issue a notice when one requires amending the contract. The mode of exchanging the notices is determined in the agreement.
Benefits of the hire purchase agreement
The primary purpose of the hire purchase agreements is to protect both parties. The buyer is protected from acquiring defective products. They are also protected from abrupt changes in the prices of the products. The seller is protected from losing their products. They are also protected from a lack of payments by the hirer. The steps that one can take whenever there is a breach of the agreement are specified in the hire purchase act.