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A commercial hire purchase is a type of car lease where the customer can obtain goods by hiring them over the repayment term. The transfer of title to the customer for the vehicle is completed when the finance provider receive's the last rental.
A commercial hire purchase is also known as a hire purchase, CHP, offer to hire or term purchase.
Under a commercial hire purchase agreement you do not become owner of the motor vehicle until all monies owed under the arrangement are paid. However, you can still claim a tax deduction for the depreciation on the motor vehicle as well as the interest component of the loan repayments where the motor vehicle is used for business related purposes.
The commercial hire purchase balloon is the amount that will need to be paid to the finance provider at the end of a commercial hire purchase. Having a balloon put into your agreement makes the monthly lease payments cheaper and much more affordable. The decision of having a balloon or not is entirely up to you, you may choose to pay the motor vehicle down to zero which means once the final lease payment is made, you own the motor vehicle.
Click here for a detailed summary of all residual values and balloon structures. Car Lease Residuals
A commercial hire purchase is suitable when you use your vehicle wholly or predominantly for business purposes. This means that the vehicle is used for business for more than 50% of the time. It's also a great option if you would like to own the motor vehicle at lease end.
Companies or sole traders using the accrual method for accounting can claim the GST as a lump sum on their next (BAS), whereas companies or sole traders using cash method for accounting can claim the GST in evenly over the term of the agreement.
The monthly repayment or balloon amount is not subject to GST.
Where the vehicle is used for business use, the hirer can claim "interest and depreciation". That is interest on the lease payments and depreciation up to the luxury car tax threshold or depreciation limit of $57,123
GST is also claimable on the purchase price of the vehicle.
Either complete our friendly enquiry form and we will call you shortly or call the number 1300 554 553 and talk to an experienced car leasing consultant today.Enquiry Form
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Advance Car Loans can give you access to the best Commercial Hire Purchase in Australia. They are the Commercial Hire Purchase experts, visit them at www.advancecarloans.com.au or call them on 1300 554 553.