Car Finance Chief

Hire Purchase

Also referred to as a Commercial Hire Purchase, CHP, Asset Purchase, Term Purchase, Corporate Hire Purchase or HP.

How does a Hire Purchase work?

A Hire Purchase is a Car Finance option where a company or individual can obtain a vehicle 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 or payment.

Benefits of a Hire Purchase

• A Hire Purchase may provide tax benefits if the vehicle is used to produce assessable income.
• Customers registered for GST can claim the GST that is included in the vehicle purchase price.
• 100 per cent Car Finance is available subject to the finance providers lending requirements.
• Repayments can be tailored to suit your cash flow requirements.
• Interest rates are fixed so you won't have to worry about rate increases
• No GST is charged on the monthly repayment or the balloon amount.

Hire Purchase "Tax Implications"

• 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 evenly over the term of the agreement.
• 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 in one lump amount.
• The monthly repayment or balloon amount is not subject to GST.

Other Options

You may also want to consider a Finance Lease, Novated Lease or a Chattel Mortgage as other Car Finance options.