Commercial transport is a popular source of living in Lagos State, Nigeria’s commercial capital. JANET OGUNDEPO peeps into hire purchase, from which a good number of the transporters benefit
Motorcycles, tricycles, taxi cabs and buses abound in Lagos for both commercial and private use. The history of commercial road transport in Nigeria’s Centre of Excellence could be traced to 1920, according to Naija Chronicles, when it was controlled by Mrs. Charlotte Obasa and W.A. Dawodu. From the 1960s, many operators came into the scene.
In the late 20th Century, there used to be an avalanche of Molue buses, which priced the Danfo buses into line. That was before the advent of the Bus Rapid Transit. Forget the cab, they are for those they were meant for.
The hire purchase option
For many in the transport business, who cannot afford the vehicles, hire purchase is the option.
Hire purchase, according to Investopedia, is a method of asset finance that provides individuals or businesses with the opportunity to acquire assets and pay up over time, after which the asset is transferred to the purchaser.
This method helps businesses or individuals, who cannot pay for the vehicle at once, to acquire it, start the payment over an agreed period and then become the full owner after full payment.
The tales
One major disadvantage of this method is that, a default in payment will lead to forfeiture of previous payments and a withdrawal of the asset. Another is that the vehicle is purchased at an exorbitant rate. This had led some less-educated locals to assume that the name is ‘high purchase.’
Mr. Wasiu Adenugba, a car dealer, said, “Hire purchase starts from the total cost of a vehicle. Assuming the total cost of a car is N1m; if you want to put it up for hire purchase, you multiply that N1m by two, that is N2m. Then divide it by the instalments the person will pay.”
But Mr Abiola Azeez, the Secretary-in-charge of the Tricycle Owners and Operators Association of Nigeria, under the National Union of Road Transport Workers, said, “We give buses as hire purchase to drivers but at a reduced price, as poverty alleviation to the needy. These buses and tricycles have a distinct colour of green at the back with writings detailing the name of the association, the zone, number and the word ‘Palliative’.”
Hire purchase business makes one to work harder everyday to meet their target, or be ready for the consequences.
“If you are not able to meet your daily target, you will have to work extra hard the next day, so you can meet up,” he added.
However, some operators would never get involved in hire purchase again due to a sour experience. One of such is Johnson Azi, who advised those on the hire purchase contract to seek another source of livelihood.
“I picked up a tricycle on hire purchase. I had just two months to complete my payment of close to N1m when the owner took it away over non-remittance for two weeks. My inability to pay was because the tricycle broke down.
“Transportation is not easy when one is not the owner of the vehicle. I advise commercial motorcycle and tricycle operators to leave the business,” said Azi, who left the transportation business for catering.
Repayment
According to Azeez, the duration for the hire purchase determines the instalmental payment.
He said, “The length of time determines the amount of money the person will be bringing in every day. If the length is shorter, the amount of money being paid will be higher.”
Adenugba added, “For a car given out on hire purchase at N2m; sometimes, the driver pays N20,000 or N25,000 monthly. Some even pay N40,000 in two weeks. Some of them even believe they can make N100,000 in a month. But N100,000 divided by N2m is almost 20 months and that will be one year and eight months. At the end of that one year and eight months, the car may be detoriated because it has been used more than its capacity because they want to meet the target.”
Default
Like Azi’s tale, default is a monster in the hire purchase business. During the agreement, the consequences of default are spelt out; hence the operators strive to always prevent that by even going to the extent of collecting loans to repay.
Adenugba said, “In terms of hire purchase, assuming that you’ve paid up to N1.5m, your balance is N500,000 and there is a default in payment for three weeks. Between the third and fourth week, the owner has 100 per cent right to withdraw the car because you’ve signed. That’s why an agreement needs to be binding between the two parties.
“So once you signed; if you do not pay the first and second weeks, they won’t call you. The third week, they may call. The fourth week, the creditor will go straight to the lawyer, from there to the police, and you will be sued. If you have a good point; that will be your justification.”
In the agreement given to those who get vehicles on hire purchase, it is stated that default is a breach of contract.
“If there is a default in the payment, the vehicle can be taken away from the the purchaser.
“However, the nature of default determines what happens next. Sometimes you might pardon the person. That is why they have to pay a deposit of maybe N100,000 or N200,000. In case of unforeseen circumstances, the deposit will be used to make up for the default and the vehicle or tricycle will be taken away,” Azeez added.
However, the operators always expect some grace from their creditors when there is default.
Joshua Afasare, a student and transporter, argues the hire purchase creditors have no right to withdraw the vehicle and give it to another person when it is just two months to the completion of the payment.
On the claim that someone’s tricycle was taken away from him two weeks to tenor expiry, he said the operator should have sold the tricycle or borrowed to pay up.
Rushing to meet deadlines
While trying to meet target, operators take to recklessness, including over-speed. Some hardly wait for the passenger to completely alight from the bus before moving again. This is common among the ones called ‘soole’, who pick up passengers by the way.
Adewale said, “At times, the vehicle might be faulty. For that day, you won’t be able to work. So to get the money you will use to pay up, that means you’re going to work harder or you borrow to pay.
“Some people in the hire purchase business go to a microfinance bank and borrow just to keep up and meet their target.”
Adenugba, however, advised operators not to overbill themselves. He urged them to have a reasonable period of time for work to save the cars/tricycles from quick deterioration.
Despite the challenges, some of the operators have been successful in hire purchase and enjoy doing it.
“I have seen some that enjoyed it. They finished paying for one, sell it and go for another hire purchase. They want that challenge of having to pay weekly or monthly because they feel ‘if I am not paying, I won’t be that serious about it’ If it is mine, I can decide not to work tomorrow. But as long as I am paying for that hire purchase, I must work,” Adewale said.
