What is Hire Purchase and When Do I Need One?
WHAT IS HIRE PURCHASE?
It is a system of buying things on credit whereby the seller of the goods is regarded as the dealer, the purchaser is regarded as the hirer and the finance company is the owner. The ownership of the goods bought on hire purchase does not pass to the hirer at the time of the hire purchase agreement or upon delivery of the goods. The ownership of the goods remains in the owner until the hirer has fully paid the price agreed upon in the hire purchase agreement.
WHAT GOODS CAN I BUY ON HIRE PURCHASE?
You can buy all consumer goods on hire purchase as well as motor vehicles such as invalid carriages, motorcycles, motor cars including taxi cabs and hire cabs, good vehicles where the maximum permissible laden weight does not exceed 2540 kilograms, and also buses including stage buses.
WHAT DOCUMENTS MUST I SIGN WHEN I BUY THINGS ON HIRE PURCHASE?
All the parties must sign a hire purchase agreement and the agreement, among other things, must specify the date when the hiring commences, the number of instalments, the amount of each instalment, the time for the payment of each instalment, the description of the goods and where the goods are kept. Note that the agreement must be in writing. An oral agreement is not a valid hire purchase agreement.
SHOULD I SIGN A BLANK AGREEMENT FORM?
Under no circumstances should you sign a blank hire purchase agreement form.
DO I NEED A GUARANTOR?
The owner may require you to furnish information on or more guarantors to guarantee the performance of your obligation under the hire purchase agreement.
HOW MUCH IS THE INTEREST PAYABLE?
The interest, often referred to as 'Terms Charges', shall not exceed 10% per annum.
HOW MUCH DEPOSIT SHOULD I PAY WHEN I BUY GOODS ON HIRE PURCHASE?
The deposit should not be less than 10% of the cash price of the goods bought. This means that the parties can agree to a deposit of more than 10% and the deposit may be paid in cash or in goods, or partly in cash and partly in goods.
WHAT WILL HAPPEN IF I DEFAULT IN MY PAYMENTS?
The owner have the right to take possession of the goods if there have been two successive defaults of payments or a default of the last payment. Then the owner must serve on the hirer a notice in writing intending to re-possess the goods after a period of not less than 21 days after the service of the notice of intention to re-possess. Thus it is essential that you are prompt in your instalment payments.
WHAT PROCEDURES MUST THE OWNER FOLLOW WHEN HE COMES TO REPOSSES THE GOODS?
If the owner comes personally to repossess the goods then he must produce his identity card and provide the hirer with the name and address of the company to which he belongs. If the owner sends his servant agent or employee then the person concerned must produce and show his identity card and his authority card. The authority card must bear the photograph of the servant agent or employee, his name and address, the name and address of the owner, the nature of appointment of the servant agent or employee and the signature of the owner.
WHAT WILL HAPPEN IF THE GOODS ARE REPOSSESSED?
When the owner re-possesses the goods he must ,within 21 days serve on you and the guarantor(s), if any, a notice in writing informing you that if within 21 days after service of the notice, you pay the owner the amount due or remedy any breach and pay the reasonable costs incurred, the owner shall forthwith return the goods. If you do not make any attempt to recover the goods, within the time provided for, from the owner after the goods have been re-possessed, the owner will sell the goods usually by public auction or by tender. If the amount recovered form such sale by the owner is less than the amount due to the owner, then the owner shall sue you and the guarantor for the deficit sum.
CAN I COMPLETE PAYMENT OF THE INSTALMENTS EARLIER THAN THE DATE AGREED UPON?
The hirer can complete the hire purchase agreement earlier than the date originally agreed upon by paying the balance due at any time during the existence of the agreement or where the owner has repossessed the goods the hirer can complete the agreement by paying the owner within 21 days, the net balance due as well as reasonable costs incurred by the owner for storage, repair and maintenance of the goods repossessed.
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