Commercial Hire Purchase
A hire purchase agreement is a contract for the hire of goods where ownership of the subject equipment remains with the Financier and does not pass to the purchaser until either the option to purchase is exercised (payout of the agreed residual) or alternatively the total agreed finance instalments are paid in full. Such a facility enables the Borrower to claim the interest and depreciation expenses as a tax deduction, with the subject asset deemed the property of the hirer / purchaser throughout the loan term.
This is good where assets are less susceptible to technological changes and have a long effective life.With a finance lease your working capital is preserved and the flexible payment arrangements will help maximise your business cashflow to fund appreciating ventures.
Rent to Own/ Operating Lease
Compared to buying and owning, renting gives you much more control over your changing needs. You have the flexibility to update to new equipment quickly and easily – even before the end of the rental term.
A chattel mortgage is a loan secured over the equipment financed. Using a Chattel Mortgage product, the purchaser takes title (ownership) of the equipment being purchased from the time of acquisition rather than on final payment.
For a novated lease, the lease and running costs of the motor vehicle, and fringe benefits tax (if applicable) are deducted from the employee’s pre-tax salary, and PAYG is calculated on the reduced salary or wages.