Corporate Hire Purchase (CHP)
|
|
| Under a Hire Purchase Agreement, the vehicle is purchased by installment payments over a specified term. Ownership is transferred from the Financier to the buyer after the last payment (balloon payment) is made. |
|
| In a basic CHP there are four variables to consider |
|
- The amount to be Financed
- The Finance Term
- Interest
- Balloon Payment
|
|
|
| In the case of a vehicle, the “on road cost” of the vehicle is usually the amount that is financed. |
|
|
| Normally CHP will have a term ranging from 1 year up to 5 years, depending on the age of the vehicle to be financed and the policy of the Financier. |
|
|
| The balloon payment is similar to the residual value in a finance lease representing the lump sum final payment at the end of the term. |
|
|
- With CHP the client claims the interest and depreciation of the vehicle as a tax deduction.
- CHP is a cost effective way for individuals to finance a vehicle as GST is not payable on the monthly payment.
- Unlike a finance lease, there are no ATO guidelines controlling the setting of balloon payments. The balloon payment can be set at $0 if the client prefers this.
|
|
|
|
 |