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Car Hire Purchase
Getting a new car for your business has become much easier with the car hire purchase financing option. A commercial hire purchase (CHP) is a commercial finance product where you hire the vehicle from the lender for a fixed monthly repayment over a set period. Otherwise known as corporate hire purchase, hire purchase or offer to hire. It’s a great choice if you are registered for GST on an accruals or cash accounting basis.
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Car Hire Purchase Overview
A Car Hire Purchase is a flexible finance solution that allows you to hire a vehicle from a lender be it a new or used car for a set period of time. This means ownership of the car is under the lender for the duration of the Hire Purchase agreement and once you clear all the repayments the ownership transfers to you. Note that even when the vehicle is under the lender’s ownership, you can still use the car as often as you wish. This financing option has a fixed interest rate hence you as the borrower are able to identify the real cost of the car since monthly repayments are fixed. For your repayments, you can choose to make monthly repayments over two to five years depending on what works for you or you can make a balloon payment at the end of your agreement to lower your regular installments though your interest fee will be higher. Last but not least, some lenders may require you to place a deposit or a downpayment while other lenders don’t ask for a downpayment.
NB: This financing option is mostly used by business owners as they don’t have to purchase a car immediately but instead they can easily make manageable monthly payments for the vehicle.
Some of the benefits of Car Hire Purchase may include;
- Interest rates are fixed. This means that for this financing option, interest rates on the loan remain the same through the entire loan term. Therefore, this makes it easy for a borrower to budget for the loan without much interference and fluctuations.
- Flexible repayments. Car Hire Purchase repayments tend to be quite flexible as they can be specifically structured to fit your cash flow. The loan contract is also flexible as it can range from one year to five years. As much as the monthly repayments are fixed, you have the option of offering a balloon payment which can lower your repayments.
- Automatic ownership after repayments. Once you complete your payments, you as the hirer get complete ownership of the car.
- It preserves cash flow. With this financing option, you have the chance to use your business funds elsewhere like investing in other areas of the business or improve in certain areas.
- No additional security is required. You as the hirer don’t have to worry about giving up any collateral for this loan
- Finance additional costs. Any additional costs associated with the purchase can be financed on the contract such as registration and on road costs.
Eligibility Criteria for Car Hire Purchase
- Must be over 18 years of age
- Eligible to work in Australia
- A good credit score and is not undergoing bankruptcy
- Your business has been trading for more than 12 months
At Braid Finance, we have partnered with reliable financial and insurance partners and you can get access to all of them in one place hence giving you the chance to compare the best finance products for you. Applying with us is also free, fast and easy. All you need to do is fill the online application form and give us your personal financial details. We will then assess your application individually so as to help you find out what option is best for you.
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