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Hire purchase is a method that allows an individual to get a vehicle by paying in instalment while using the vehicle. This vehicle may be for family use, uber/bolt, logistics, taxi, etc.
The amount to be paid for your hire purchase as a driver depends on the agreement you had with the seller. Other factors will come in to consideration such as type of vehicle, amount of the vehicle, interest rate, initial deposit, and length of the agreement. In this blog post we will break down how much drivers pay monthly for a hire purchase
What is an example of a hire purchase?
Option 1:
Let us say Mr A wants to start a bolt/Uber and he needs a Toyota Camry. He goes to check the price of the vehicle and decides to do hire purchase instead of buying directly. Assuming the Toyota Camry costs N6,000,000. He pays an initial deposit of N2,000,000 and decides to pay the remaining N4,000,000 in 24 months at an interest rate of 10%.
Amount of vehicle = N4,000,000
Interest rate = 10%
Duration = 24 months
Amount to be paid monthly = N183,400
Total amount to be paid at the end of 24 months = N4,401,600
Option 2:
Let’s say Mr. P wants to buy same Toyota Camry of N6,000,000 and deposits noting but ants to pay in 30 months at an interest rate of 13%.
Amount of vehicle = N6,000,000
Interest rate = 13%
Duration = 30 months
Amount to be paid monthly = 226,000
Total amount to be paid at the end of 30 months = N6,780,000
You can see the difference in the payment of hire purchase by two different drivers from above. Mr. A is paying less monthly and within a shorter time than Mr. P. Option 2 is costlier and means a lot in terms of profitability. However, in terms of cash flow and ease of payment, initial deposit and spreading the remaining amount over 30 months can provide some buffer.
Factors to consider
- Your budget: What is your financial plans? Do you have any other projects at hand?
- Your long-term plans: Do you want to own the car outright, or would you prefer to change vehicles more frequently?
- The car’s depreciation: How well does the model you’re interested in hold its value?
- Initial deposit: Is the initial deposit something you can afford?
- Location: Where do you intend to use the vehicle for your bolt/Uber?
Is hire purchase a good idea?
Yes Hire purchase is a good idea if your are working with a budget or you want to invest passively
Who should go for hire purchase?
Anyone can go for hire purchase as long as you can pay at the end of the duration agreed. Usually, hire purchase is a good idea for Bolt/Uber, taxi, etc.
How to get started
Applying for Hire purchase with edoproperty.com is quick and easy. You fill out our online application in less than two minutes and we will get back to you with an answer. Once we have agreed the hire purchase, choose a car and we will sort the rest.