Are you a sole trader, a partner in a company or the owner of a trading company? Do you use your vehicle mainly for business purposes? Are you looking for a secured finance option with lower interest rates where you can expense your repayments? If so, a Commercial Hire Purchase agreement could be the way to go.
What Is Involved With A Commercial Hire Purchase
The financier secures and pays for a vehicle on your behalf with an offer to hire it back to you for an agreed time frame (the term). During the hire term you do not own the vehicle but you can use it as you see fit. Ownership transfers to you at the end of the term and only after payment of the total price including interest, minus any residual costs.
Benefits Of A QLD Money Commercial Hire Purchase
- Flexible contract terms ranging from 24 to 60 months
- Fixed interest rates
- Lower interest rates as finance is secured against the vehicle
- Repayments are fixed for the entire hire term
- A deposit can be used to lower repayments
- A residual value/balloon amount is offered
- Associated costs are upfront
- Tax deductions for businesses (see below)
- GST is not charged on either the monthly rental payment or residual value
Tax Benefits For Individuals Using A Commercial Hire Purchase
- Businesses who use the accrual method for GST can claim the GST component of the vehicle purchase price on the following BAS Statement
- Businesses who use the cash method for GST can claim the GST as equal instalments over the term of the agreement
- GST is not charged on either the repayments or the residual amount
- If business is GST registered you can claim the GST on the vehicle purchase price
- Interest portion of repayments can be claimed
- Depreciation on the vehicle can be claimed
- Hire purchase financial commitments are listed as capital expenditure on your balance sheet
This type of finance can be used by any individual but particularly suits individuals wanting a predominantly business vehicle including owners of sole trading business, partnerships and trading companies.
