Commercial Hire Purchase (CHP)
A Commercial Hire Purchase (CHP) agreement is a lease option designed for commercial use only. The financier is the owner of the car to whom you pay rent with an intention to purchase the car at the end of the lease period.
Since there has to be an intention to purchase the car the depreciation of the asset and interest repayments can be claimed as a tax deduction.
Benefits of Commercial Hire Purchase
- Tax advantages – you can claim asset depreciation and interest repayments
- Option to purchase a vehicle prior to the end of the lease term
- Lump sum repayments possible in order to reduce the loan amount and pay less interest over the leasing period
- Ownership at the end of the lease
- Fixed repayments
- Flexible terms from 1 to 5 years
- Balloon payment can be extended at the end of the lease
- GST is not charged on the monthly rental or residual payment, however GST is charged on fees and interest