Commercial Hire Purchase (CHP)
A Commercial Hire Purchase (or CHP) agreement is used where ownership of the asset is key. Built into the CHP contract is an acknowledgement that the hirer gains automatic ownership upon making the final payment. A CHP is most commonly used when financing luxury vehicles, and offers some additional flexibility over Finance Leases by allowing you to make up-front deposits if you desire.
Full Use, at a Known Cost
Like a Finance Lease, you have full use of the equipment during the term. You have the security of a predictable monthly payment, which can be lowered by adjusting either the deposit or the end of term ‘balloon’.
End of Term Options
At the end of the CHP term, ownership is ensured by simply paying the pre-determined balloon (similar to the residual value on a Lease). Note though, that you do not usually have the option of handing the equipment back as you do with a Lease or Rental. It is possible, however, to repay the contract before the end of the term.
Tax Effective Asset Management
While the equipment does appear on your Balance Sheet, any interest paid plus depreciation of the equipment is tax deductible with business use. Because payments are calculated on the GST inclusive price, CHP payments attract no GST.
Click here for a comparison between CHP, Finance Lease and Rental
The Leasing Centre's expert staff will work with you to build a solution to allow you to secure the equipment you need to grow your business. We tailor each equipment finance strategy specifically to the needs and capacities of each client - our solutions are designed to effectively help bridge the gap between needs and budgetary constraints.
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