The financier purchases the goods and hires them to the customer. When the final payment is made, ownership of the goods passes to the customer.

Benefits to Business

• Preserve your working capital – immediate access to equipment without upfront payment.
• 100% finance is available for approved customers. Customers may wish to provide a deposit or be required to provide a deposit for finance approval.
• Easier cash flow management – payment terms can be matched to the customer's income.
• Won't tie up existing assets – the item being purchased is the only security for the finance.
• Tax benefits – interest and depreciation are potentially deductible.
• Balloon payments (a lump sum payment at the end of the contract that settles the debt) can be arranged for approved customers. This enables customers to pay a lower monthly instalment during the term of the agreement, and then pay a balloon at the end of the term.

Goods and Services Tax (GST)

• The financier claims the Input Tax Credit (ITC) when the asset is purchased from the supplier.
• The financier then issues a tax invoice (including GST) to the customer (the Commercial Hire Purchase agreement).
• If the customer holds an ABN and accounts on an accrual basis, the customer may be able to claim the ITC upfront. Otherwise the ITC may be claimed over the life of the agreement.
• No GST is payable on repayments, any balloon or terms charges.

From a taxation perspective the customer is treated as having acquired the equipment from the financier via a loan at the commencement of the agreement. However, full title of the goods does not pass to the customer until final payment is made.

Need more information?

If you would like to learn more about a Commercial Hire Purchase, please call our Customer Service Centre on 1300 887 967 or submit your question using our enquiry form and a member of the Madison Team will contact you to answer any questions.

You can also request an online quote or apply online for a Commercial Hire Purchase.

Once you've heard what we can offer in terms of our range of competitive products and specific contract details, you'll have the confidence to know you've made the right decision.