LET ME TELL YOU MAINA. I know many Kenyans buy cars on hire purchase. But have you ever thought of what happens when the rubber meets the road ? When you can’t pay for the monthly installments of your car? Will you be able to smile again or it will be agony and tears?
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So I have done some thread on hire purchase before. In today’s thread, I will focus on what happens when you fail to pay for the car and consequences of not doing so. Okay, for those who are wondering what a hire purchase is, (It is where one deposits and amount on the car and
*An amount on the car and clears balance later while using the car) To cut the long story short, each car Delaer has their own hire purchase terms ( The deposit required and the number of months given ). So the FUNDAMENTAL question is what happens when one is not able to pay ?
When you can’t pay for your car, according to the sales agreement that you signed, the dealer will repossess the car. The process of repossessing the car isn’t a friendly one. It involves a lot of phone calls and texts messages and even the police are involved. Once your car is
repossessed, it is taken back to the dealership. The dealer will give you some time (usually two weeks but depends on the agreement you signed ) to come clear the outstanding balance on the car. This is usually a tough time for any Kenyan who has been owning a car and now has to
run around on foot looking for money to settle the balance and also explain to his family that the car that they have been used to as part of their possession is not available to take kids to school. Remember when the car is brought back to the Dealership, many potential buyers
usually hover around to buy the car because many Kenyans believe repossessed cars have good prices and have no mechanical issues. There are usually ready buyers for these units. But what happens if you can’t get the money for the two weeks notice and pay for the car ? You know
The answer, the dealer will sell the car and you will not be refunded your money. I know this is according to the agreement you signed. Dealers are also in business and therefore they may be right to so. If you can’t pay for the balance, you may opt for financial Microfinance
To buy out the balance and pay the dealer while you remain with the car. This process seems so nice on paper and very dangerous financially in practice. Now if your balance on the car is 350k which you are not able to pay , Microfinance A will send the their valuers to value the
The car in question. They will value the car at 1.1M or more. Remember your balance was 350k, but you will have a loan of 1.1M to pay within a given period of time. Also remember before you defaulted, you were already paying installments on the car. This one car will siphon money
out of your pocket for life. There is a lot of exploitation that comes with this process. You end up working for a car that you could have bought in cash and forgotten the stress. Now if you ask me, I will be honest with you, looking for a Microfinance to buy out the balance is
Even more expensive. But again if you fail to act within the two weeks notice , the car will be sold. If you can’t pay for the balance, the BEST method you can use is to borrow from a friend the 350k balance, go clear the balance and pay back your friend.
If you cant get the money from your friend, please put the car on sale for 1.1M, go pay the Delaer 350k take back home the balance. It is better than losing the car and the money altogether.
IN CONCLUSION: You are the one who knows your pocket, you know the bills , you know
your financial inflows. All you need to know is if you have the ABILITY to COMFORTABLY pay for the balance on the car without stress and depression. If you tick that box, then you can go for hire purchase option. If your income is very unpredictable , you better buy your car in
cash even if means buying a small car. Alternatively, you can just WAIT until you have the money. Imagine losing the car and the money or paying 2M on car that is marked at 1M in the market just because you refused to accept the REALITY at that time that you couldn’t AFFORD …
Be keen and conscious enough before buying your car on loan/HP. Don’t alter the lifestyle of your family and deny them the things you could afford for them before you bought the car on loan. Be WISE. For more content on cars subscribe to my channel here:
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