What's the difference between a commercial hire purchase and a chattel mortgage?

A commercial hire purchase lets your business hire a vehicle from the lender while making regular repayments until you've paid it off. Ownership transfers to you once the final payment is made. A chattel mortgage, on the other hand, gives you immediate ownership of the vehicle, with the lender taking out a mortgage over it as security until the loan is repaid.

Can I claim GST on a commercial hire purchase?

Yes, if your business is registered for GST, you can generally claim the GST paid on the purchase price of the vehicle upfront in your next Business Activity Statement (BAS).

Do I need a deposit for a commercial hire purchase?

In most cases, a deposit isn't required, but lenders may ask for one depending on your credit profile or the value of the vehicle. A deposit can help lower your ongoing repayments and interest costs.

Can I get a commercial hire purchase if I'm self-employed?

Yes. Many financiers offer commercial hire purchase agreements to self-employed individuals, sole traders and small business owners. You'll usually need to show your ABN, business financials and proof of income.

Is the balloon payment tax-deductible?

The balloon payment itself isn't deductible, but the interest portions of your repayments and the depreciation on the vehicle may be. You should confirm your specific tax deductions with an accountant or tax adviser.

What happens if I want to pay out my hire purchase early?

You can usually pay out a commercial hire purchase before the end of the term. The lender will provide a payout figure that includes the remaining balance and any applicable early termination fees. Doing so can help you save on interest.

Can I finance used vehicles with a commercial hire purchase?

Yes, many lenders accept used vehicles provided they meet age and condition requirements. Each lender sets its own restrictions, so check these before applying.

Are interest rates fixed or variable on a commercial hire purchase?

Most commercial hire purchase agreements offer fixed interest rates, giving you predictable repayments over the term. However, some lenders may offer variable options, depending on your agreement.

Can a commercial hire purchase affect my business credit score?

Yes. Making regular, on-time repayments can help build a positive credit history for your business, while missed payments could negatively impact your business credit score.

What happens at the end of the hire purchase term?

Once you've made all repayments, including any balloon or residual payment, legal ownership of the vehicle transfers to your business. You're then free to keep, sell, or trade in the vehicle.

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