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Hire Purchase Business in Nigeria, How Profitable?

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Eno Johnson
Eno Johnson is my name, I am an entrepreneur in the making. This blog was birthed because I needed a platform to pen my experience down in Agriculture and business.

Hire purchase business is very lucrative and many people don’t seem to know. Maybe because the money is spread across several months so it looks as if it is not viable. The business is somehow popular in Nigeria and in Africa as a whole.

This kind of business does not disturb you from doing any other job neither do you have to labour to generate money. All you need to do is to purchase any asset of your desire and then source for buyers. The good thing is that many people are looking for who to buy from.

There are many kinds of hire purchase to use for your business. Hire purchase is a method of buying business properties and be paying the owner installmentally at an agreed period of time.

The type of higher purchase can be to purchase vehicles (okada (bike), keke, cars, truck, buses,plant & machinery). Other assets that are considered as soft assets such as office furniture, computer software, house ware such as fridge, television, generator etc.

The most lucrative is vehicle hire purchase business, such as; car, keke napep, okada, truck etc. Household, office items and, other soft assets hire purchase are usually done by people who are selling the properties. They will offset the price so that by the time you pay, they would have made equivalent or above that they would have bought for sale within that time.

Hire purchase business
Image from Naira land

Making use of the different types of hire purchase business is good for business minded persons who are ready to start but do not have starting capital. They buyers will be able to pay the owners while making use of the property in an easy way including paying to cover the cost of using the assets. This is why it is very difficult for them to save money while paying.

Merits of using the Different types of hire purchase:


Hire purchasing business owners, spreads the cost of their asset over a period of time. Giving you access to operate the property from day one. Since it is installmentally you will be able to purchase the item and pay without stress. You can even decide to pay everything off in a matter of time.


The cost of item is fixed and because of written agreement the price will not be changed even if the goods have increased or reduced in price. Most times it is always increase instead of decrease in price. In hire purchase you can decide to take a fixed payment option or variable.


The business owner, that is the person purchasing the product is the one to decides whether to purchase the asset or not at the end of the agreement.

Challenges of Hire Purchase Business

Although the merits are more, however, there are also demerits which is very typical of any business. The main drawback to hire purchase business is:

  • Failure to pay as agreed. To retain the assets you have to look around for money. It can affect your business greatly especially if you were able to build up your customer base.
  • Defaulting in the payment will make you loose intergrity.
  • You are the one to repair and do maintenance on the asset for the period of time you are using it. Eventhough you are not the real owner until you have finished paying.

Requirement for Hire Purchase Business in Nigeria


Insure Your Property with a Reliable Insurance Company. The first thing to do when starting a hire purchase business is to insure your property immediately with a legit insurance company.. This is just in case of ‘if’, what if there is an accident or robbery attack. Nobody prays for that but then you need to be ahead of any eventuality.

If such a thing happens it is the insurance company that bears the liability so you don’t have to border yourself. The reverse is the case when you don’t insure. It means you can’t get nothing from anywhere except your family members or friends come to your rescue.

Evaluate your Cost

Make sure you write down every expenses you make like; insurance, registration, the amount for the item purchased etc. It will help you to know how much to give the hire purchase out. The amount to add will be in consideration to the capital and other expenses.

Evaluating your cost will include those expenses you wrote down; purchasing cost, registration cost (for vehicles, motorcycles, tricycles) and any expenses spent on the property.

Map Out Installment Plan

Once you know the total cost of the asset, you map out a suitable installment payment plan that will give you your money back and the interest within a short time. The period of installment payment should not be more than 1 year; usually it is between 6 months to 1 year in most cases but more for buses and trucks.

This process will help your business grow fast. And you would have gotten your money back within a year then hand over the vehicle to the buyer and reinvest again. So the cycle continues.

Develop a Strategy to Manage the Buyer

Human beings and situations are unpredictable. One common thing that has been observed in hire purchase business is that at the beginning the buyer will keep to the agreement. And will be depositing the money as at when due.

But after a while he will start making excuses. Some of those excuses may be genuine and sometimes no, but a make up. This is mostly observed with buyers on car hire purchase business who uses them for transportation.

To make sure your business is not abused or run down you have to guide against this likely occurrence.

Here are Things to put into considerations:

  1. Ask yourself this question, what if the buyer of the asset miss the payment for once or many times? Did you put plans in place to make sure your money is paid on time.
  2. Who will take the responsibility for maintenance? Most times it is the buyer that repairs the car. He will come back to tell stories, not all of them but those who are not sincere. You can decide to be the one to fix the property especially if it is mobility by so doing you can manage your business well.
  3. Some will tell you that the repair car every week. That they money they would have brought for the week was spent on repairs. The best thing you can do is to get a mechanic or electrician to be servicing your car to avoid excuses.

Get a Reliable Buyer for Your Hire Purchase Business

Hire purchase business must be done with good understanding. There are basic things to put into considerations especially when looking for a buyer. It will be better to have a little background about the person you are giving your car or any other property to.

Some of the people came under compulsion, some are lazy and have becone a burden to the family. Due to much pressure decided to find refuge in hire purchase business.

while others came to purchase your property so they can make up for old debt which they are oweing someone else. Don’t release your car to somebody you don’t know at all or cannot trace.

I’m sure you must have heard stories of people pretending to buy car on hire purchase or rent only to run away with the car. The stories are endless so be wise.

Let anyone that comes to you bring quarantors that are government workers and can be traced. Selling to a family member, village person, church brother is not bad but be careful because some will come with so many excuses and will expect you to understand with them. Others will even throw caution to the air with the view that he is my personal person.

Hire purchase business

What Do I Need To Start Hire Purchase Business

Write a Business Plan

Writhing a business plan for any business is ideal, making plans for something is so that you will not fail in that thing. Develop a hire purchase business plan so that you will know all that the business entails. It will help you to succeed and last longer in the business.

The business plan should include;

  • What to purchase
  • Cost of vehicle or other item
  • The model and brand of the vehicle
  • How you want to run the business

Choose your Vehicle Carefully

Make sure you do a thorough research on the kind of vehicle you want to purchase. The durability, also is it the type of vehicle used for commercial purpose in your area. Go for affordable, strong cars that will help you develop payment plans in such a way you can realize your investment fast.

Develop Effective Payment Plan

Let your plans be realizable don’t be too ambitious put yourself in the place of the person buying your asset. The payment should be such that the buyer can pay easily so that he can be committed to it.

How Much to Charge in Hire Purchase Business

Charge times two of the amount you bought it for keke, car should be times three. Then electronics such as television, generator 25% charges.


Many people are making a living and creating wealth from hire purchase business. You can start with one and grow it over time. Don’t fail to enter written agreement with the buyer. The buyer should bring quarantors that are civil servants. Always inaure your vehicles, furniture, electronics or whatever your asset is, with a good insurance company.

To protect your business and investment you need a car tracker to monitor your vehicles. Call: 08035965405 for car tracker.

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