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HIRE PURCHASE

FOR BUSINESS USE

Overview

  • Suits business use

  • Loan terms generally 1 - 5 years

  • Lender takes ownership of the item and then the customer hires it back over a set term

  • Secured basis

A Hire Purchase is a commercial finance product where the customer hires the vehicle from the financier for a fixed monthly repayment over a set period of time. 

Under a Hire Purchase arrangement the financier agrees to purchase the car on behalf of the customer, and then hire it back to them 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 the customer takes ownership of the car.

 

Benefits Include

  • Contract terms generally 12 to 60 months 

  • Residual value (balloon or final instalment) may be placed on contract

  • Fixed interest rate

  • Deposit (either cash or trade-in) may be used, often no deposit is required

  • 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 can claim the GST in the vehicle price, fees and interest

  • Monthly repayments are fixed

A Hire Purchase is suitable for business entities & sole traders when the item to be purchased is for business use. 

GST, depreciation & interest on the loan can be claimed if the item is used for business purposes. Check with your accountant to determine if the product is right for you.