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Car hire purchase has become one of the most popular ways to own a vehicle in Nigeria. This is because with hire purchase you can get a vehicle while you pay over a period of time. Hire purchase a low risk investment for those looking to make extra income at little or no stress. It is one of the best way to generate passive income through vehicle financing, and offers opportunities and risks you must understand.
This blog post will help you answer frequently asked questions (FAQs) about car hire purchase. Let’s get started
What Is Car Hire Purchase?
Car hire purchase is a vehicle financial arrangement where a hirer takes possession of a car and pays for it in installments over an agreed period. The buyer becomes the legal owner of the product once payment is completed.
How does car hire purchase work for a driver?
Car hire purchase works uniquely for everyone but here is a typical example. As a hirer, you enter into an agreement with a car owner/hire purchase company. You pay a fixed monthly installment over a period of 12 to 36 months while using the car for commercial or personal purposes. You may be asked to pay an initial deposit in most cases. Once the total agreed amount is paid, the ownership is transferred to you.
Can I use the car for Bolt, Uber, or other ride-hailing services?
Yes. Most car hire purchase deals are designed for commercial use such as Uber, Bolt, independent taxi, logistics or delivery services.
What is the duration of car hire purchase agreements?
Duration of hire purchase payment differs but here are some of the acceptable period.
- 12 months
- 15 months
- 18 months
- 24 months
- 36 months
The length of the period of payment depends on the owner, financial capacity of the driver, amount and many other factors.
Is a down payment required for hire purchase?
Yes. Most car owners/hire purchase companies request a down payment. A don payment is an initial deposit made by the buyer. It is usually a percentage of the cost of the vehicle. This reduces the investor’s risk and shows your financial commitment.
Can I take a hire purchase car in Edo state?
Yes, you can. You can either transact directly with the seller of through a hire purchase companies such as Autochek, Edocproperty and Gbovotransport
What happens if I miss monthly payments?
Default in making payment may attract extra charge such as
- Late fees
- Car repossession
- Contract termination
- Legal action
Can I terminate the hire purchase agreement before completion?
Yes, you can but you may Incur a penalty, lose previous payments and Forfeit ownership rights
You may need to read your hire purchase agreement in Nigeria carefully before signing.
Can I register the car in my name during the agreement?
No. The car remains the owner/company’s property until the final payment is made. Registration typically remains in the owner’s name until ownership is transferred.
Read How to register for Hire Purchase in Edo State?
Is car hire purchase better than bank auto loans?
Well it depends on what you want. For many self-employed drivers, hire purchase is more accessible than bank loans. Unlike banks, hire purchase doesn’t require formal credit checks or collateral. However, interest rates may be higher.
How does car hire purchase generate income for investors?
Here is how investors generate income from hire purchase. He buys a car and lease it to a driver through a hire purchase agreement. The driver pays him back monthly (with profit) over 12–36 months. His income comes from the interest charged over the period.
What types of cars are best for hire purchase investment?
Suitable cars for hire purchase investment are Toyota Corolla, Toyota Camry, Honda Accord, Mini Buses, Pickup Vans, Kia and many more. Before picking any care always check for Fuel efficiency, reliability, and resale value.
Is hire purchase investment safe?
Although hire purchase is a low risk investment you may have to consider the following
- Payment default
- Car theft or damage
- Driver misconduct
What documents are required to begin a hire purchase contract?
Documents required for hire purchase contract includes
- A detailed Hire Purchase Agreement
- Vehicle ownership documents
- Proof of identity (for both parties)
- Insurance papers
- Guarantor details (from the driver)
How do I find reliable drivers for hire purchase?
You can source for trusted and reliable drivers through
- Friends and family members referrals
- Partner with platforms such as Uber/Bolt
- Work with car management agencies such as Edoproperty
The frequently asked question (FAQS) about hire purchase will guide you properly whether you are an investor or a driver or individual seeking for a vehicle for your business.