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Commercial Hire Purchase Explained

A trusted, fixed-repayment structure where you hire the asset and take full ownership once the final payment is made. Decades of use by Australian businesses for its simplicity and predictability.

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Hire Purchase

Commercial Hire Purchase Explained

Under a commercial hire purchase (CHP), the finance company purchases the asset and hires it to you. You make fixed regular payments over the term and take ownership automatically when the final payment is made.

Best for:

Businesses that want simple, predictable repayments and guaranteed ownership at the end — with no residual or balloon. Popular with tradespeople and small businesses.

Advantages

  • ✓Fixed repayments for the life of the loan — easy to budget
  • ✓Automatic ownership transfer at end of term
  • ✓Interest component tax deductible
  • ✓Depreciation can be claimed over asset useful life
  • ✓No deposit required in many cases
  • ✓Suitable for GST-registered and non-registered businesses

Things to Consider

  • −Asset appears on your balance sheet
  • −GST typically paid or claimed upfront
  • −Less flexibility than a lease
  • −No option to return the asset at end of term
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FAQs

Common Questions

Both result in ownership. With a chattel mortgage you own from day one; with hire purchase the lender owns until final payment. In practice, tax and cash flow outcomes are similar for most businesses.
Traditional CHP has no balloon — you own the asset outright at the end. Some lenders offer CHP variations with a residual, but the classic structure is full repayment with automatic ownership transfer.
Yes. Sole traders, partnerships, companies and trusts can all access CHP — it's one of the most accessible structures for small business owners.
Cars, utes, trucks, trailers, equipment, machinery and most business assets used predominantly for business purposes.
Related

Compare Other Finance Structures

Chattel Mortgage →Finance Lease →Low Doc Equipment Loan →Fleet Finance →

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