Is Hire Purchase Car Business Profitable in Nigeria?

Are you still contemplating if hire purchase is a profitable investment in Nigeria? Then think again because the transportation sector in Nigeria is one of the fastest-growing sectors due to the constant movement of people, goods, and services across cities and towns. With the rise of platforms such as Bolt, Uber, InDrive, transport businesses like taxis and shuttles, many investors are shifting into investing in hire purchase

Is hire purchase car business profitable in Nigeria?

Yes, the hire purchase car business is highly profitable.

What is Hire Purchase Car Business?

Hire purchase is a financing system where a driver or individual gets a car and pays for a period of time while making use of the car. The driver pays an agreed amount weekly or monthly until the car is fully paid off, after which ownership of the car is transferred to the driver.

Hire purchase is usually financed by an investor (an individual or company). Hire purchase is usually binded legally by a signed contract by both parties involved

Benefits of Hire Purchase Car Business in Nigeria

1. High Profit Margins

One of the biggest attractions of hire purchase is the guaranteed profit. Investors do not just recover their initial capital; they also earn significant returns. For instance, a ₦5 million car can bring in ₦7–₦8 million over the repayment period.

2. Steady Cash Flow

With hire purchase, investors enjoy regular weekly or monthly payments from drivers. This creates a consistent stream of income that can be used for reinvestment, bills, or savings for investors. Hire purchase offers financial stability and low risk.

3. Low Operational Stress

Unlike running a transport company where the investor must manage drivers daily, hire purchase shifts most of the responsibility to the driver. In hire purchase, the driver handles fuel and car maintenance cost. This makes the business relatively stress-free for investors who only need to monitor payments.

4. Scalability of Investment

Hire purchase is highly scalable. Investors can start with one car and gradually increase to multiple vehicles as they reinvest profits. Some investors in Nigeria now run fleets of cars under hire purchase, generating millions in passive income.

Risks to Consider

Though hire purchase may be a low risk investment, like every business, hire purchase has risks, but they can be managed. Here are some ways to manage them

  1. Driver defaulting on payment – It is very important as an investor to get trusted drivers who you don’t need to run around with before you get your money. Always screen drivers before giving hem your vehicles and also ensure a guarantor is involved as his will reduce your risk. A written should be signed.
  2. Car theft or accident – Insure the vehicle before giving it out. You can also install GPS tracker as this will be very useful when car theft is involved.
  3. Dishonest drivers – Avoid dishonest drivers as much as you can. Some drivers may be lying and may not want to make payment while using the car to make money for himself. Carry out proper background checks and work with trusted guarantors.

How to get started

  • Visit edoproperty.com
  • Register and fill the necessary details
  • Get started immediately

You can also read How to invest in a Hire Purchase Car Business in Nigeria?

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