1. Flexible contract terms
2. Monthly lease and interest rates are fixed, you know the costs in advance
3. Deposit (either cash or trade in ) may be used
4. Tax deductions can be claimed for depreciation of the equipment
5. Residual can be applied to lower monthly repayments
6. Customers registered for GST can claim GST in the equipment price
7. Ability to structure repayment to suit cash flow
Benefits –
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Hire Purchase
Used by many businesses and is very similar to Equipment leasing where the lender holds ownership of the asset while the business owner makes tax deductible monthly repayments. At the end of the contract term when the total price of the equipment (minus any residual) and the interest is paid in full, the business then takes full ownership of the equipment.