Things need to know about Commercial Hire Purchase

Views: 3275

Decades ago, having your own luxury car or heavy equipment vehicle may demand a challenging amount of funds for purchasing. Not in our lifetime. As of the present there are several companies that offer options that may help augment the difficulty of buying your vehicle for personal or business use and the most popular of which is commercial hire purchase.

car finance

What is Commercial Hire Purchase or CHP?

For a buyer who now doesn’t have the possibility to purchase in lump sum his desired means of transportation or for an entrepreneur who wanted to maximize his capital by not placing the bulk of his funds to equipment then Commercial Hire Purchase is the perfect solution for their need. Commercial Hire Purchase allows a buyer to use a vehicle by hiring it at a fixed amount and after finishing the agreed conditions for payment, may buy the rented property or return it back to the owner.

To process CHP, a financial contract is usually made by the owner (company or individual) and the hirer to acquire and use a vehicle by paying a certain amount (including the repayment of the principal plus interest) in terms or installment plan for a period of time.CHP may also be termed as rent to own or closed end leasing.

What are the benefits of Commercial Hire Purchase?

Commercial Hire Purchase is beneficial to buyers because they will be able to make the most of their finances. They won't be paying entirely an expensive item but have it distributed over a longer period of time. It will also give people the chance to make use of the vehicle while enjoying the flexibility of periodic payment that may be lessened through initial deposit or balloon payment at the end of contract.

Vehicles that will be used for business purposes, though may not appear on the company's balance sheet, may still avail of tax deduction for the interest paid and the depreciation value of the equipment.

What is the difference between a lease or rental and Commercial Hire Purchase?

A lease or rent is a documented deal made by the owner (lessor) to a user (lessee) who wanted to avail of his assets or possessions upon paying a computed amount of rental. The lessee will be allowed to use the equipment for a settled period by providing regular lease. With Commercial Hire Purchase the lessee which is now called a hirer will still be paying periodically but this time with the option to acquire the property. The computation for payment includes the repayment of principal plus the interest. In this arrangement the hirer obtains the goods right away upon on signing the contract agreement but the ownership is given only after giving the last settled payment (it may include a balloon payment to cover remaining cost of the product).

To simplify, a person may pay higher if they avail of CHP because of the repayment of principal plus interest but will be given the privilege of owning the very product that they have been long paying for.

Joel Cordle is a specialist in car finance; he helps you with the solution right for you. Whether it’s a cheap consumer car loan, a short term operating lease or a fully maintained novated lease or car lease.

 

A post by joelcordle (8 Posts)

joelcordle is author at LeraBlog. The author's views are entirely his/her own and may not reflect the views and opinions of LeraBlog staff.
th

Leave a Reply