Chattel Mortgage - Under a Chattel Mortgage the financier advances funds to the client to purchase business equipment, and the customer takes ownership of the equipment (chattel) at the time of purchase. The financier then takes a mortgage over the equipment as security for the loan. Once the contract is completed, the mortgage is removed giving the customer clear title to the equipment. GST is charged in the purchase price of the equipment but not the monthly rental or the contract balloon (final instalment). Where the client is registered for GST, they can claim some or all of the GST contained in the equipment's price as soon as they lodge their next Business Activity Statement (BAS), rather than over the term of the loan. Under a Chattel Mortgage the client claims the depreciation of the equipment and the interest expense of the finance as a tax deduction, and a deposit may be used. Commercial Hire Purchase - Under a Commercial Hire Purchase arrangement the financier agrees to purchase equipment on behalf of the client, and then hire it back to them over a set period of time. The client has the use of the business equipment for the term of the contract but does not own it. At the end of the contract term when the total price of the equipment (minus any residual if any) and the interest charges have been paid in full, the client takes ownership of the equipment. Where the hirer is registered for GST, they can claim back the GST contained in the purchase price of the equipment. Businesses using Accrual accounting can claim the GST as a lump sum on their next Business Activity Statement (BAS), whereas those using Cash accounting can claim the GST in instalments over the term of the contract. Under a Commercial Hire Purchase the client can claim the depreciation of the equipment and the interest expense of the finance as a tax deduction, and a deposit may be used. Finance Lease – Under a Finance Lease the financier purchases equipment on behalf of the client who then pays the financier a fixed monthly amount for the term of the lease. At the end of the lease the client can pay the residual on the lease and take ownership of the equipment, sell the equipment and payout the residual amount or re-finance the residual and continue the lease. Under a Finance Lease the client claims the full amount of the lease repayment as a tax deduction as the financier has ownership of the equipment, and a deposit may not be used. Equipment Rental – Under an Equipment Rental the financier purchases equipment on behalf of the client and rents it to them for fixed payments over a fixed period. The client simply makes fixed monthly rent payments, and at the end of the contract either hands back the equipment to the financier (with no more to pay), continues the rental agreement or may have the option to buy the equipment outright at market value.