Corporate Hire Purchase

A Commercial Hire Purchase is for any business or individual in which the vehicle is used predominantly for business purposes. Regular repayments are made over the term, you can choose to finance the total purchase price or use a deposit or trade-in to reduce your amount financed or add a final lump sum balloon payment to reduce the loan repayments thus improving cash flow. Come tax time, the interest charges paid in that year on are claimed as the business expense.

Finance Lease

Again, this suits any business or individual that uses their car predominantly for business use. The difference is that the car is treated as an expense not an asset, so the business expense is calculated as the percentage of the payment made on the lease. Leases must have a balloon payment at the end of the term.

GST is not financed up front, but paid on the repayment amount.

Chattel Mortgage

This is almost identical to a CHP in how it operates with the exception that it allows the GST in the purchase price of the car to be claimed in total at the Business Activity Statement (BAS).

Often this is the option recommended by accountants as they only need to deal with the GST in the purchase once.

Check with your accountant as up coming changes to how CHP can treat GST may make a Chattel Mortgage redundant.

Operating Lease

An operating lease suits any business or ABN registered individual that wants to lease a car and not worry about the balloon risk or being stuck with a car at the end of term. In an operating lease, the car is handed back to the lender at the end of the term, thus putting the balloon payment risk with the lender.

You can also include the standard maintenance costs of the car in the lease. The only items not included are comprehensive insurance