What is a Commercial Hire Purchase?
A Commercial Hire Purchase is generally suitable for businesses using the “accruals” method of accounting for GST, or for individuals who used their motor vehicle for business related purposes. Under the “accruals” method, the GST component of the purchase price of the motor vehicle (or other asset) can be claimed back on the next BAS, rather than claiming the GST over the term of the finance contract.
Commercial Hire Purchase is a rental agreement, however it differs from a Finance Lease in that the goods automatically become yours once the terms of the agreement have been completed. The Financier maintains ownership of the vehicle or equipment until the final payment is made, however for tax purposes you can claim depreciation and the interest component of the monthly rental as a monthly business expense. GST is not payable on the monthly Commercial Hire Purchase repayments.
Also, as distinct from a Car Finance Lease, you have the option of including an upfront deposit or trade-in to reduce your monthly rental, while a balloon payment may also be set at the end of the term (similar to a Finance Lease residual payment).
Alternatively, you may choose to structure your rentals to clear the debt in full over the full term of your agreement.
Our Car Finance Options
Platinum Car Loans offers you all the right car financing options, these include Novated Lease or Novated Leasing, Commercial Hire Purchase, Chattel Mortgage, Car Lease, Finance Lease, Novated Lease, Operating Lease and all Consumer Secured Car Loans.
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