Hire Purchase

This support note is suitable for :

• MYOB Accounting 
• MYOB Premier 

Hire Purchase transaction is a common feature for small and medium industry. The guide book will show how it is recorded in ABSS.

Situation 1

You purchase a Motor Vehicle – Car on a hire purchase basis over a period of 7 years (84 months). The price of the car is $64,200 ($60,000 plus $4,200 GST) with the interest rate of 4%. The total interest paid is $17,976.36 so the total loan from the finance company is $82,176.36.

1. Create a liability account for the finance company*The Account type should be in Credit Card
2. Create an asset account for the Motor vehicle – Car
3. Create the expense account for the interest paid
4. Record the acquisition of the Motor Vehicle
5. Record the monthly payment

Situation 2

You purchase a Motor Vehicle – Car on a hire purchase basis over a period of 7 years (84 months). The price of the car is $64,200 ($60,000 plus $4,200 GST) with the interest rate of 4%. You made a deposit of $20,000. Hence, the total interest paid is $12,375.68 with the total loan from the finance company is $56,575.68

Follow the step 1 until 3.

4. Record the initial acquisition of the Motor Vehicle – Car with the deposit.Review the HP – DBS account and check the balance
5. Record the monthly payment