Hire Purchase Finance
With a Hire Purchase Agreement, the financier buys the goods on your behalf and retains ownership until the debt has been paid in full. The financier secures their loan by way of a registered charge over the goods and once you have paid the debt in full, they hand you title to the goods.
Although the financier owns the goods, you can have equity in them, so the amount you borrow can be reduced by way of a deposit.
These loans enable you to pay the full amount over the term of the loan or have a Balloon Payment due at the end, to reflect the market value of the goods if sold.
For accounting purposes, you claim the GST on the purchase price, the interest on the loan and the depreciation of the goods through your Profit & Loss Statements.
