A hire purchase agreement involves the lender purchasing an asset and leasing it back to your business at a fixed monthly rate.  At the end of the term, your business can either purchase the asset for the residual value, upgrade to new equipment (in the case of vehicles), or pay out the residual amount and transfer ownership from the lender to the business.

A chattel mortgage is essentially any item of property excluding real estate.  As such, a chattel mortgage refers to a type of loan whereby the lessee purchases the asset and the lender registers a mortgage on it.  Essentially, if the lessee defaults on the loan, the lender can claim against the mortgage.

With a hire purchase agreement, ownership of the asset remains with the lender and it is leased back to your business. With a chattel mortgage, your business retains ownership of the asset, and the lender registers a mortgage over it. There are slightly different tax implications, so we recommend speaking with us and your accountant.

Yes, you can claim input tax credit for both chattel mortgage payments and hire purchase. Please refer to your accountant to make sure structure is suitable to you.