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Commercial Hire Purchase

Supplier: Finlease (Australia)

You own the item from day one.

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With Commercial Hire Purchase (CHP), you the borrower actually owns title to the asset. At the end of the loan term, you have the option of having a residual (a lump sum or ‘balloon’), which means lower repayments. Alternatively you can pay out the loan completely by making slightly higher regular repayments, then ending up with a zero balance at the end of the term.

Advantages and applications
Commercial Hire Purchase finance tool is ideal for acquiring movable items which are relatively large and which will have a service life of several years or more.

  • Manufacturing machinery.
  • Cars, trucks and commercial vehicles.
  • Computers and IT systems.
  • Commercial real estate: offices, factories and shops.
  • Cranes and construction equipment.
  • Office and retail fitouts.

Who can benefit most
Commercial Hire Purchase is suitable for any sized business that reports GST on either a cash or an accrual basis.

Tax situation
You are entitled to claim depreciation on the asset. Paying GST is your responsibility and it can be paid from your cash flow, or you can add the GST amount onto the commercial hire purchase amount.

If you report GST on a cash basis, you cannot claim the GST in one lump sum, but over the term of the finance.

Alternatively, if you report GST on an accrual basis, you can claim the entire GST amount in your next BAS return.

Security
The security for the loan is the asset itself, which means there is a charge registered against your company.

Please note that Finlease service Australian customers only.

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