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Commercial Hire Purchase

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What is a commercial hire purchase?

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.

How does a commercial hire purchase work?

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.

Balloons and terms

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.

Standard balloon structures

Click here for a detailed summary of all residual values and balloon structures. Car Lease Residuals

What are the benefits of a commercial hire purchase?

  • Commercial hire purchase terms range from 12 to 60 months
  • A tax deduction is available if used for business use
  • Interest rate is fixed for the term
  • Commercial hire purchase repayments are fixed for the term
  • Lower interest rates due to the finance lease being secured against the vehicle
  • No GST is charged on the monthly commercial hire purchase payment
  • Customers registered for GST can claim the GST that is included in the vehicle purchase price
  • We can have you in your new car within 24-48 hours
  • You will receive great hands on personalised service from an experienced car leasing consultant

Who should consider a commercial hire purchase?

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.

What are the tax implications of a commercial hire purchase?

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.

Are there any other options?

If you are thinking about doing a commercial hire purchase, you may also want to consider a Finance Lease, Chattel Mortgage or Novated Lease as other car leasing options.

Need Further Information?

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.

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Car Lease Comparisons

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Commercial Hire Purchase

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 or call them on 1300 554 553.