Stress-free Hire Purchase Car Loans
Experience Stress-free Hire Purchase with Vehicle Connect and Our Large Network of Car Dealers in Sydney
What is Hire Purchase?
Hire purchase is when a lender agrees to purchase a car on behalf of their client, then the client can hire the car for a set period of time with a fixed payment to be made every month.
Generally, the interest rate for hire purchase remains the same throughout the period of the agreement. The lender will only be in charge of buying the car; the client will be responsible for all the other costs associated with the vehicle, such as the registration, insurance and maintenance. This kind of agreement is most suitable for businesses.
Vehicle Connect wants you to have a seamless car buying experience. We can help you every step of the way—from looking for the exact car model and the right car dealer in Sydney, to finding the perfect lender or financier for your big purchase.
How Does Hire Purchase Work: A Quick Guide
Here are some useful tips on car financing:
Create a structure for a hire purchase that will suit your needs.
As mentioned previously, hire purchase is suitable for businesses. This allows you to use the car without making a major dent to your cash flow. You can either opt for a fixed or flexible payment scheme, depending on what you think is more suitable for your business. You can also choose to make a balloon payment in order to reduce your monthly repayments. Hire purchase allows you to obtain a car without draining your working capital.
Choose hire purchase for flexible ownership options.
The car is not fully yours until the hire purchase agreement has been completed. However, you do have the choice to purchase the car at any point of time during the loan term. This way allows you to save money on interest repayments, but there may be lenders who charge additional fees. There are added tax benefits when you go for hire purchase, since GST is not charged on a monthly or regular repayment. This means that you will be able to claim it without making a dent on your working capital. On top of that, you can also claim the fuel input tax credit.
Remember that Hire Purchase counts as an expense in Accounting.
As you know you get taxed for your assets, but since hire purchases are generally fixed repayments, they are accounted for as expenses. You can structure your hire purchase with variable loan terms from 12 to 5 years.