Avoid hire purchase hassles

By Bank Windhoek's Executive Officer of Credit, Eddie King.

If you are in the market for a pre-owned vehicle, you must be aware of the risks involved and take steps to protect yourself from potential fraud. This is especially true when the car you are interested in may be subject to a hire purchase agreement with any financial institution. Here are some tips to help you protect yourself when buying a pre-owned vehicle:

Please do your research: Before making any purchase, research the vehicle make and model you are interested in to get an idea of its fair market value, common issues and overall reliability.

Check the vehicle history report: A vehicle history report can provide valuable information about the vehicle's ownership, service and accident history.

Take note of hire purchase agreements. If the vehicle you are interested in is subject to a hire purchase agreement, be mindful of the risks involved and take steps to protect yourself. Check for any outstanding debts or charges against the vehicle and ask the seller for proof of settlement from the financial institution or dealer who sold the car. Approach any or all financial institutions to request a Hire Purchase (HP) scan on the specific vehicle. Request the necessary information from the owner, such as the chassis number and engine number.

Confirm the ownership documents: When inspecting the vehicle, check the ownership documents to ensure the seller is the vehicle's legal owner.

Look for signs of wear and tear: Thoroughly inspect the vehicle for signs of wear and tear, including rust, dents and scratches. Test the car to get a feel for handling and check for unusual noises or vibrations.

Consider using a reputable dealer: Consider purchasing the vehicle from a reputable dealer or seller with a good track record of selling cars. They can provide additional information about the vehicle and may offer warranties or guarantees.


By taking these steps, you can help protect yourself from potential fraud and ensure that you get the best value when purchasing a pre-owned vehicle.

Please note that purchasing a vehicle still under HP with any financial institution may result in you losing the car and the money spent in buying it. As per the Instalment Sale Agreement of any financial institution, the vehicle remains the financial institution's asset until paid in full. Therefore, the financial institution is the lawful owner of the vehicle. As a third party, you will have no recourse against the financial institution should a court order be granted for repossession of the vehicle. However, you can institute legal action against the person you purchased the vehicle from. Please remember that you may be liable for criminal charges against you should you refuse the lawful owner (financial institution) to repossess the car.

Remember to be thorough in your research and inspections, and always be aware of the risks involved in any purchase.

Side note:

What is a hire purchase agreement?

Under a hire purchase agreement, the borrower typically makes a deposit and then pays the remaining balance, plus interest, in regular instalments over an agreed-upon period. However, the borrower only owns the vehicle once the final payment is made. Once all instalments are fully paid, ownership of the car is transferred to the borrower. The lender typically retains the right to repossess the vehicle if the borrower defaults on the loan, meaning they stop making payments. The lender remains the car's owner and has the right to repossess it from any third party and will not be held liable for any money exchange between the borrower and the third party.

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