Car Leasing Option: Commercial Hire Purchase

You must have heard of some acronyms posing as car financing options. However, it has remained a riddle, creating cobwebs of doubt, as to what comprise these car financing deals.

One of these acronyms is CHP short for Commercial Hire Purchase. It's that option where customer hires the car from a financier, paying a fixed monthly repayment, over a certain period of time. In this set-up the customer gets to use the car but is not the righteous owner of the car, not until the end of the contract when the car's total amount with residual values and interest charges have been paid full; then the customer can claim ownership of the car.

So let's discuss the advantages you can get from a CHP, sometimes called HP. There are several of them:

• fixed interest rates
• flexible contract terms usually from 24 to 60 months or two to five years
• residual value (full or installment basis) that may be placed on contract
• fixed monthly repayments
• cash or trade-in may be used as deposit
• costs are known in advance
• tax deductions for cars used for business
• government sales taz is not added on the monthly rate or the residual amount
• customers can claim GST on the vehicle price
• finance allows low interest rates since finance is secured against the vehicle

Who can benefit the most of a Commercial Hire Purchase deal are partnerships, companies, sole traders whose GST is on accrual basis,and any individual, private or not, using the car for business.

Source: https://www.strattonfinance.com.au