How To Start Hire Purchase Business: Okada, Keke Napep, Car, Danfo Bus, Trucks
A hire purchase business involves giving out a vehicle to another party on agreement that this individual usually a driver will use it for commercial purposes in a bid to pay for the total cost of the vehicle (with interest) in installments. The driver uses the vehicle for passenger, goods or oil haulage and pays an agreed amount daily, weekly, biweekly or monthly until he covers the cost stipulated by the agreement between him and the investor. The time frame varies from vehicle to vehicle and agreement to agreement but is usually between the range of 6months to 1year.
Investors in truck, car and motorcycle hire purchase business can make between 150% - 200% return on their investment in a single deal. This comes from the interest that the driver pays on the vehicle when paying back for the vehicle he uses. For instance, an Okada goes for around 120,000 naira but most investor give it out on hire purchase between #180,000 - #200,000.
Also Read: Where And How To Get Loans To Start Business
What Do I Need To Start Hire Purchase Business?
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Develop a business plan so that you have facts available in preparing to start your business. Salient facts you need to put into consideration include; brand, model and cost of vehicle to buy; what they would be used for and for how long they would be used before you get back your money.
==> Choose Your Vehicle Carefully
Carry out extensive research on the preferred vehicles used in the commercial sector. Consider affordable ones to help design the payment plan in a way to recoup your investment within the shortest time frame.
==> Get A Reliable Driver
Giving your vehicle to a unreliable person can give rise to problems and challenges. Verify every information supplied by the driver such as his address and family. Always insist on at least 3 guarantors.
==> Make Your Agreement Solid
Ensure you cover all areas in your agreement. Don't leave out loopholes that drivers may exploit to the detriment of your business. What happens when the driver defaults, an accident or mechanical fault occurs (preventing the usage of the vehicle) are part of the issues to be covered in the agreement signed by both parties.
==> Design An Effective Payment Plan
Come up with a feasible amount and easy payment method to help recover your investment within the stipulated time.