What is Commercial Hire Purchase?
A Commercial Hire Purchase is a commercial finance product where you hire the vehicle from the lender for a fixed monthly repayment over a set period.
Otherwise known as corporate hire purchase, hire purchase or offer to hire. It’s a good choice if you are registered for GST on an accruals or cash accounting basis.
How does Commercial Hire Purchase work?
The lender agrees to purchase the vehicle on your behalf and then hires it back to you over a set period. You’ll have full use of the vehicle for the term of the contract, you just won’t be the owner.
At the end of the 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.
What else do I need to know?
- Flexible contract terms ranging from 1 to 5 years
- Residual value (balloon or final instalment) may be placed on contract
- A tax deduction may be 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 may be able to claim the GST in the vehicle price, fees and interest*
* Please refer to your accountant for eligibility.
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