term of a commercial hire purchase can range form 12 months to 60 months
fixed interest rate applies
ownership of the asset is transferred to the client when the final payment or residual payment has been made by the customer
payments can be made weekly, monthly, quarterly, yearly or structured (i.e. agreed payments over different times of the year)
residual payment at the end of the term can be applied to the loan reducing monthly payments
client can contribute a deposit towards the purchase (either through trade in or cash) or fund 100% of the cost of the asset
depreciation and interest is claimed as a tax deduction at the end of the financial year on customer profit and loss statement
Benefits of a Commercial Hire Purchase
financing heavy machinery using a commercial hire purchase loan product as opposed to using own funds, will preserve cash flow to maximise working capital position
flexible payment options allows clients to make payments suitable to their cash flow
fixed payments allow businesses to accurately project income and expenses going forward
option of a residual payment at the end of the term reduces payments over the term of the loan
commercial hire purchase loans for heavy equipment can be assessed on either a full doc or low doc basis
as these types of loans use the equipment as security, it allows clients to free up property equity to pursue other investment opportunities
residual payment can be paid out at the end of term (by way of trade in or cash payment) or refinanced (by way of a new loan agreement)
