There are generally four major ways you can borrow to purchase a motor vehicle for your business:

 

Commercial Hire Purchase (CHP)

CHP is an agreement between you and the financier. The finance company owns the vehicle during the hiring period. At the end of the term, the goods automatically become yours once all terms of the agreement have been met.

This type of lending can be made with or without a residual payment at the end of the term.

 

Chattel Mortgage (CM)

This is a very similar product to a CHP with the main exception being that the vehicle is purchased in your name (or your company’s name) with the finance provider taking a charge over the vehicle effectively stopping you from selling the vehicle until the debt is paid back in full.

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Finance Lease

A less popular way to fund a new vehicle is a Finance Lease. It is a form of rental agreement under which you lease an asset for an agreed period. A residual value is set upfront to reflect the asset’s value at the end of the term. You don’t necessarily have the right to purchase the asset at the end of the lease term.

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Novated Lease

Only employees with a car allowance in their salary package are generally able to avail of a Novated Lease. It is basically an agreement between an employee, the employer and the finance company.

 

The employer agrees to make the payments on the lease whilst the employee is within their employ. These repayments are taken out of the employees salary pre tax.

 

We would suggest you discuss this option with your tax advisor before proceeding.

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Contact us today

If you are looking to purchase a new or used motor vehicle for your business, you need to contact our amazing team at admin@sonicfinancegroup.com.au

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