commercial hire purchase

A Commercial Hire Purchase is generally used by a company or an individual for financing a car or cars for business purposes.

When you take out a CHP on a car, we buy the car and you then hire it from us for an agreed term.

You can choose to have a balloon payment at the end of the term, which reduces the monthly payments.

A balloon payment is an amount larger than the monthly hire payments, due at the end of the agreement.

chattel mortgage

The word "chattel" is defined as "a moveable article of property". When using a Chattel Mortgage, a business takes ownership of the car straight away without having to tie up capital in the purchase. The business can also claim tax eligible benefits on the car, however the car must be used for business more than 50% of the time.

A Chattel Mortgage can be ideal for clients who operate their accounts on a cash basis and wish to claim the GST up front as input tax credit. As with a CHP, you may also include a balloon payment at the end of the agreement to reduce your monthly payments.

The fundamental difference between a Chattel Mortgage and a CHP is that in a CHP agreement there is a contract for the hire of goods where the title in the goods remains with the financier and does not pass to the purchaser until either the option to purchase is exercised by the purchaser, or the final instalment is paid.

With a Chattel Mortgage the buyer takes title in the chattel from the time of purchase. The buyer, or the borrower, finances the purchase price (or part thereof) of the chattel by way of a loan from nlc, and applies the borrowed funds as payment to the supplier for the chattel.

novated lease

An employee leases a car from us using a standard Finance Lease. A Deed of Novation is then entered into between the employee, the employer and nlc.

This transfers the employee's obligation to pay the lease rental under the finance lease to the employer for the term of the Deed of Novation or term of employment.

The employer deducts the employee's pre- and post-tax salary and then pays nlc for the car costs covered under the lease as part of the employee's salary package.

finance lease

A Finance Lease provides the ability to rent a car for a set period of time with the option of buying the car at the end of the lease by paying out the residual value. A residual value is similar to a balloon payment, except the residual value is set by the ATO and varies with lease term.

A Finance Lease can also be used by companies that don't want to tie up capital owning a depreciating asset.