Commercial Hire Purchase
Under a Commercial Hire Purchase (CHP) 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 when the total price of the vehicle (minus any residual) and the interest charges have been paid in full, the customer takes ownership of the car.
Benefits of a Commercial Hire
- Flexible contract terms ranging from 12 to 60 months (one to five years)
- Residual value (baloon or final instalment) may be placed on contract
- Fixed interest rate
- Monthly repayments are fixed
- Costs are known in advance
- Deposit (either cash or trade-in) may be used
- A tax deduction is available when the vehicle is used for business purpose
- 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