What is a Commercial Hire Purchase
A Commercial Hire Purchase is a commercial finance product also referred to as a CHP or HP (hire purchase) This involves the customer hiring the vehicle from the financier for a fixed monthly repayment over a set period of time.
How does a Commercial Hire Purchase work?
Under a Commercial Hire Purchase arrangement the lender purchases the car, and then hire it back to the customer over a set period of time.
The customer has the use of the vehicle for the term of the contract but is not the owner of the vehicle.
At the end of the contract term when the total price of the vehicle (minus any residual) and the interest charges have been paid in full, the customer takes ownership of the car.
What are the advantages of a Commercial Hire Purchase (CHP)?
Flexible terms ranging from 12 to 60 months (one to five years)
Residual value (balloon or final instalment) may be placed on contract to reduce repayments
Fixed interest rate and monthly repayments
A tax deduction is available when the vehicle is used for business purposes
GST is not charged on the monthly rental or residual payment (but is charged on fees and interest)
Customers registered for GST may be able to claim the GST in the vehicle price, fees and interest*
What's the Yellow Line?
A Commercial Hire Purchase may be a good option for business owners looking to take advantage of owing a new vehicle with the added benefit of a range of tax deductions.
Behind buying a new home, a new car is likely to be the next largest financial decision you will make. There are a vast range of products and banks are extremely competitive. It is best to seek professional financial advise to ensure you obtain the most appropriate home loan product for your needs.
Yellow loans has a vast range of lenders with a range of products to achieve the best results on obtaining the best car loan deals for you. You can contact us here and we can get your future looking bright.
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