Commercial Hire Purchase is an alternative to lease finance in assisting businesses to acquire assets.

Commercial Hire Purchase Information

The types of assets financed using CHP are similar to leasing and may be classified into the following categories. By clicking on the appropriate item you will receive information on acceptable residuals and be able to obtain indicative finance quotations.

Motor Vehicles
Trucks & Buses
Plant, Equipment & Computers

Different interest rate structures apply to each category.

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Motor Vehicles

To obtain a quotation, input the selected term and residual from the following chart

Input the amount to be financed, the required term, and the balloon amount.
The current interest rate will appear which is an estimate of the rates available through Robert Mayor & Associates Pty Ltd. Final pricing is subject to the lenders criteria & assessment of each proposal. The monthly repayment will be calculated. If you wish, you can override the automatic interest rate by inputting your own figure which will adjust the repayment accordingly.

In order for the calculator below to function correctly, you should be using either Netscape Navigator version 2.02 or higher, or Microsoft Internet Explorer version 3 or higher.

To operate the following quotation calculator enter the appropriate amounts in each input field. Once you have entered a figure in the first input field you may use the tab key to advance to the next input field. Once all of the input fields are filled, to generate the final monthly repayment figure, press inside the monthly repayment field with your cursor.

The interest rate will be automatically generated which is an estimate of the current interest rate available through Robert Mayor & Associates. Final pricing is subject to the lenders criteria and assessment of each proposal. If you wish, you can override the automatically generated interest rate by inputting your own rate.

Input Term (months) Input Amount Financed Input Residual Value Input Interest Rate  24,36,48 or 60   eg enter $20,000 as 20000   eg enter $3,000 as 3000   eg enter 8.5% as 8.5  MONTHLY REPAYMENT

Note: Amounts to be financed less than $7,500 are not available

Note: 1) For vehicles over four (4) years old, increase rate by 1% and re-input

Note: Amounts Financed less than $7,500 are not available. Rates depend on application rating and Revs $11. N.B. Quotes do not document fee of $375 including GST. Chattel costs extra.

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Trucks & Buses

To obtain a quotation, input the selected term and residual from the following chart

To obtain a quotation, input the selected term and residual from the following chart

Trucks

Standard Terms	24 Months	36 Months	48 Months	60 Months
Standard Balloons	0-50%	0-40%	0-37.5%	0-25%

Buses

Standard Terms	24 Months	36 Months	48 Months	60 Months
Standard Balloons	0-60%	0-50%	0-40%	0-35%

The quotes provided are for vehicles new and up to four (4) years old 

Input the amount to be financed, the required term, and the balloon amount. The current interest rate will appear which is an estimate of the rates available through Robert Mayor & Associates. Final pricing is subject to the lenders criteria and assessment of each proposal. The monthly repayment will be automatically calculated. The automatic interest rate feature can be overridden by inserting your own rate if required. 

Quotation Calculator

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Plant, Equipment & Computers

To obtain a quotation, input the selected term and Balloon (amount owing at the end of the term) from the following chart:

Plant & Equipment

Standard Terms	24 Months	36 Months	48 Months	60 Months
Standard Balloons	0-50%	0-40%	0-35%	0-25%

The quotes provided are for goods new and up to four (4) years old 

Input the amount to be financed, the required term, and the balloon amount. The current interest rate will appear which is an estimate of rates available through Robert Mayor & Associates. Final pricing is subject to the lenders criteria and assessment of each proposal. The monthly repayment will be automatically calculated. The automatic interest rate feature can be overridden by inserting your own rate if required.

Computers & Other High Depreciation Items

The quotes provided are for goods new and up to four (4) years old 

Input the amount to be financed, the required term, and the balloon amount. The current interest rate will appear which is an estimate of rates available through Robert Mayor & Associates. Final pricing is subject to the lenders criteria and assessment of each proposal. The monthly repayment will be automatically calculated. The automatic interest rate feature can be overridden by inserting your own rate if required.

Quotation Calculator

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Commercial Hire Purchase Information

What Is Commercial Hire Purchase (CHP) Finance?
What Type Of Goods Can Be Financed?
What Goods Can't Be Financed Using CHP?
Can There Be A Residual At The End Of The CHP Term?
How Long Can a CHP Agreement Be Taken Over?
What Is The Tax Treatment For CHP?
How do I Know Whether I Should Finance An Asset Using Leasing Or CHP?
What Is The Difference Between Leasing And CHP?
What are the GST Considerations with CHP?

What Is Commercial Hire Purchase (CHP) Finance?

Commercial Hire Purchase is a way for businesses to acquire assets without having to pay for them in a lump sum. The business pays for the goods over an agreed term and obtains ownership when the last rental is paid.

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What Type Of Goods Can Be Financed?

Motor Vehicles, Trucks, Buses, plant & equipment and computers are some examples of goods that can be acquired using CHP. The list can be expanded to include aircraft, boats and virtually any asset that can be acquired by a business to generate income.

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What Goods Can't Be Financed Using CHP?

The only items that can't be financed are usually consumables, such as stock, stationary, items of repairs and maintenance etc. Usually only items of a capital nature can be acquired using CHP.

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Can There Be A Residual At The End Of The CHP Term?

YES, but it is not called a residual. It is called a balloon. As with leasing finance, the amount of the balloon at the end of the CHP term SHOULD NOT EXCEED what the asset is worth at the end of the CHP term. If a Balloon is part of the CHP structure, then ownership of the goods passes to the hirer after all of the CHP rentals and the balloon amount have been paid to the finance company or bank.

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How Long Can a CHP Agreement Be Taken Over?

Terms for CHP agreements are usually between 12 and 60 months.

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What Is The Tax Treatment For CHP?

With Commercial Hire Purchase the hirer receives the depreciation of the asset being financed plus the interest portion of the annual repayments under the agreement. The tax deductibility therefore under CHP is usually higher in the first period of a contract and reduces over the term of the loan. This is particularly evident with the financing of high depreciation items such as computers , software and interstate heavy haulage trucks.

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How do I Know Whether I Should Finance An Asset Using Leasing Or CHP?

This can be a difficult decision with many factors being involved. From a purely financial consideration the decision should be based on the most tax effective method of the borrowing. This is usually done using a computer model which accounts for all of the expenses and deductions under both types of borrowings for a particular asset back to a net present value, or real cost. One can then decide which is the best choice to make.
But often there may be other considerations such as cash flow considerations where the borrower is looking for the lowest repayments, or where the borrower is looking for high tax deductibility in the first 12 or 24 months of a contract. These decisions should be taken on the advice of a qualified person (usually an accountant). Our company has the computer support for these decisions and can assist if required.

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What Is The Difference Between Leasing And CHP?

With CHP you are acquiring the ownership of the asset. The tax treatment is the same as for paying cash, that being the depreciation of the asset and the interest expense in financing that ownership. With Leasing you are merely using the equipment and paying a monthly rental which is fully tax deductible. With CHP at the end of the term, and provided you have made all of the payments under the agreement, you become owner of the goods.
With Leasing, at the end of the lease term a residual amount is owing on the goods. The lessee (you) can make an offer to purchase the goods for an amount equal to the residual value, but whilst the financier (owner) of the goods almost always accepts the offer, they are not obliged to do so. Hire Purchase is therefore about acquiring the ownership of an asset whilst Leasing is about obtaining the use of an asset.

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What Are the GST Implications with CHP?

As the hirer (borrower) is deemed to be the owner of the goods under a Commercial Hire Purchase agreement, the GST which is payable on the purchase of the asset is the hirers responsibility. This amount can be either financed or paid for in cash by the hirer. Businesses that are registered for GST (have an ABN) can claim this GST back either over the term of the contract (if the business accounting is based on the cash method) or in a lump sum (if the business accounts on the accrual method).

With Commercial Hire Purchase, as the GST liability is payable on the purchase price of the asset, there is no GST levied on the monthly rentals as is the case with leasing finance. There are many other GST issues relating to CHP depending on the structure and needs of a hirer. For example, a PAYE employee who receives a car allowance and is not registered for GST and wishes to finance a vehicle on CHP, has extra considerations. These include the amount of the GST which can be claimed based on business usage and also the timing of when the GST can be claimed. In all cases, borrowers should check with their accountants to receive advice on the appropriate considerations when financing assets.

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Contact Us for More Information

If you would like to find out more information about anything covered on this page, please contact us and we will assist you with your enquiry. Thank you.

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