On hire purchase, you pay a deposit now and the rest in monthly instalments with interest, usually a flat rate. A ₦1,800,000 freezer with ₦450,000 deposit over 6 months at 3% a month flat costs ₦265,500 a month and ₦2,043,000 in total. Enter your deal below.
How the Hire Purchase Calculator works
- Enter the price of the item.
- Enter the deposit you pay now.
- Enter the number of months and the monthly flat rate.
- See the instalment, total interest and the total cost of the item.
Worked example
A restaurant buys a ₦1,800,000 chest freezer, paying ₦450,000 deposit and the rest over 6 months at 3% a month flat.
Amount financed: ₦1,350,000
Interest: ₦243,000
Monthly instalment: ₦265,500
Total cost of the freezer: ₦2,043,000
Common mistakes to avoid
- Looking only at the instalment, not the total cost
- No written agreement
- Not getting receipts for instalments
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Is it worth it?
Hire purchase makes sense when the item earns money straight away, such as a freezer for cold drinks or a generator for a salon. Compare the monthly instalment with the extra profit the item brings in.
Get everything in writing
Ask for a written agreement showing the price, deposit, rate, instalments and what happens if you miss a payment. Keep a receipt for every instalment, and ask for a final receipt when you finish.
Frequently asked questions
What is hire purchase?
Buying an item with a deposit and paying the rest in instalments, often with interest.
Is the rate usually flat?
Often yes. Ask the seller.
Who owns the item before the last payment?
Usually the seller or finance company, until you finish paying. Check your agreement.
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