Commercial hire purchase is a finance agreement between an individual or company and the finance company. In order to utilize this facility the vehicle must be used wholly or predominantly for business purposes.
The borrowed amount can be paid in full over the term of the loan, or leaving a balloon payment due at the end of the term. The term of the finance can be 12 to 60 months, with 24 or 36 months most prevalent.
In order to claim any taxation benefit, receipts for the full period and a three-month log book must be maintained. The tax deductible amount is dependant upon the percentage of business usage versus personal use.
Benefits
- Choice of vehicles
- Choice of finance term and residual
- Portability of lease when changing employer
- Retain control of vehicle
- Retain profit in resale (could be subject to capital gains tax)
- Actual costs rather than inflated projected costs
- Option to change over vehicle when most suited rather than tied into the employers finance term