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A commercial hire purchase is an innovative finance product that enables a business to buy a car. It works by a financier purchasing a vehicle on behalf of the business, and then leasing it back to them over an agreed-upon period of time. At the end of this period, as long as the price of the vehicle and interest has been paid back in full, the business takes ownership of the car. A commercial hire purchase has a range of benefits for businesses, and one way to work out these benefits is to use a commercial hire purchase calculator.
The calculator below is intended as a guide. Remember that each leasing provider and lender is different and it's always important to take into account the comparison rate and any fees and charges associated. This calculator is meant as a guide only and doesn't factor in GST.
Using the calculator is simple. You just enter your information into the relevant fields and the calculator will calculate your repayments on your car finance.
John is looking to purchase a new vehicle for his business, which is a delivery service. His cash flow won’t allow for him to buy a new vehicle, so he wants to know how much his repayments will be with a commercial hire purchase. Using the commercial hire purchase calculator, he enters the following amounts:
After inputting those amounts he can see that his monthly repayments will be $274.53. Wanting to save some money, he sees what would happen if he made weekly repayments. Using the calculator he can see that his weekly repayments would be $63.35, which would be approximately $20 less a month than if he made monthly repayments.
As outlined in the case study above, you can change the information you enter into the calculator and see if your repayments are reduced. By simple changing from monthly to weekly repayments John was able to reduce the amount he paid each month. You can also increase your residual payment, but keep in mind that this will still need to be paid at the end of the loan term.
Reducing interest and reducing repayments are two entirely different things, though you can reduce the interest payable by lowering your principal. You can reduce your interest by lowering your loan term, increasing the frequency of your repayments or by budgeting to make additional repayments.
The calculator is an approximation, but it is an accurate approximation as long as the information you put into it is correct. Keep in mind the calculator doesn’t take into account the fees or other costs that may come with your commercial hire purchase.
No personal information is needed to use the CHP calculator. You only need the loan amount, the loan term, the interest rate, the repayment frequency, and the residual amount and percentage (if applicable).
No, the commercial hire purchase calculator will only provide you with a repayment amount based on the loan information you provide. It is up to the individual lender to decide what your actual loan and repayments will be.
Picture: Shutterstock
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