Commercial Finance – Commercial Hire Purchase

Commercial Finance – Commercial Hire Purchase

Commercial Hire Purchase (also known as Asset Purchase or “CHP”) is similar to leasing, Visit here http://allfinancialtips-help.blogspot.com

except the customer claims the allowable depreciation on the equipment plus interest as a tax deduction, as opposed to claiming the actual lease payments, as with a finance lease. The choice between the two will depend on which option maximizes the company’s tax deduction. This in turn will depend on the term and the depreciation rate allowable on the equipment.

Payment Structure

The customer can structure the payments so that nothing is owed at the end of the term or a small “balloon” payment (like a “residual” in a finance lease) can be used to offset and reduce monthly payments.

Advantages

• Unlike a finance lease, no restrictions apply to term structures.
• Tax ownership lies with lessee – interest expense and depreciation are claimed.

Disadvantages

• For those on the “cash” method of accounting, GST is claimed and amortized over the duration of the loan period.
• Amount financed inclusive of GST – interest expense is therefore higher.

Equipment Finance Broking Firm

Established in 1990, Melbourne Finance Broking is regarded as one of the most progressive equipment finance broking firms in Australia. With over 40 staff around the country and realizing enormous finance volumes (commanding significant buying power), the broking house deals with over 30 of Australia’s banks and lending institutions, including some with exclusive agency.

Heavy Equipment Financing

Each broker or broking team within Melbourne Finance runs their own business specialty. The corporate entity, Heavy