Commercial Finance
Lease, Corporate Hire Purchase and Chattel Mortgage
For many people, deciding between a Lease, Corporate Hire Purchase (CHP) or a Chattel Mortgage can be a daunting decision sometimes. Here we outline the main differences between the various options to help you make a more informed decision. Finmore Capital can guide you through the benefits of the various options.
Lease, Corporate Hire Purchase and Chattel Mortgage
For many people, deciding between a Lease, Corporate Hire Purchase (CHP) or a Chattel Mortgage can be a daunting decision sometimes. Here we outline the main differences between the various options to help you make a more informed decision. Finmore Capital can guide you through the benefits of the various options.
Finance Lease
A Finance Lease gives you 100% funding to acquire vehicles or equipment for your business. The lender owns the goods, and you lease them for an agreed term with fixed repayments. A residual value, based on ATO guidelines, is set according to the asset type. At the end of the lease, you can buy the goods or extend the finance until they are fully owned. This option helps preserve your working capital, with rental payments that may be tax deductible. Most depreciating assets can be financed, and repayments stay fixed for the entire term.
Corporate Hire Purchase
A Commercial Hire Purchase (CHP) suits companies, partnerships, and sole traders who report GST on an accrual basis. It also applies to individuals using vehicles for business. Under a CHP, the financier buys the vehicle on your behalf and hires it back to you for a set term. You use the vehicle during the contract but do not own it until the end. Once all payments, including interest and any residual, are made, ownership transfers to you. This option requires no upfront capital and offers flexible terms. The interest and depreciation may be tax-deductible.
Chattel Mortgage
A Chattel Mortgage is ideal for sole traders, partnerships, and companies using the cash method for GST. It’s a mortgage over goods that gives you immediate ownership of the equipment. Finmore Capital offers flexible options — you can finance the full purchase price, make a deposit to lower repayments, or add a residual at the end of the term. The GST on the purchase can be claimed back in your next Business Activity Statement instead of over the finance term. This option requires no capital outlay and offers flexible terms. Interest and depreciation may be tax-deductible
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