Commercial hire purchase calculator
How much could your business save with a commercial hire purchase?
A commercial hire purchase is an innovative finance product that enables a business to buy a car. It works by a financier purchasing a vehicle on behalf of the business, and then leasing it back to them over an agreed-upon period of time.
At the end of this period, as long as the price of the vehicle and interest has been paid back in full, the business takes ownership of the car. A commercial hire purchase has a range of benefits for businesses, and one way to work out these benefits is to use a commercial hire purchase calculator.
The calculator below is intended as a guide. Remember that each leasing provider and lender is different and it’s always important to take into account the comparison rate and any fees and charges associated. This calculator is meant as a guide only and doesn’t factor in GST.
How do you use the commercial hire purchase calculator?
Using the calculator is simple. You just enter your information into the relevant fields and the calculator will calculate your repayments on your car finance.
- Loan amount. This is the amount you intend to borrow.
- Term of the loan. The loan term is the amount of time agreed-upon by you and the financier. It’s generally between one and five years for fixed repayments or one and seven years for variable.
- Residual (balloon) percentage. There is a percentage of the principal that is not paid for in monthly repayments, and is paid for at the end of the loan term. This is referred to as a residual or balloon percentage.
- Residual (balloon) amount. This is the dollar amount that the residual percentage represents.
- Interest rate. The rate of interest that you pay for the commercial hire purchase. This may be fixed or variable.
- Repayment frequency. How often do you make repayments? Weekly, fortnightly or monthly?
Case study: John’s delivery service
John is looking to purchase a new vehicle for his business, which is a delivery service. His cash flow won’t allow for him to buy a new vehicle, so he wants to know how much his repayments will be with a commercial hire purchase. Using the commercial hire purchase calculator, he enters the following amounts:
- Loan amount: $10,000
- Loan term: 3 years
- Residual: 15% ($1,500)
- Interest rate: 8% p.a.
After inputting those amounts he can see that his monthly repayments will be $274.53.
Have more questions about using the commercial hire purchase calculator?