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Commercial Hire Purchase

A Commercial Hire Purchase, otherwise known as a CHP, or simply ‘Hire Purchase’, is a commercial finance product enabling the client to hire an asset from a financier for a fixed term with fixed monthly repayments, to then take ownership of the asset once all principal and interest charges have been repaid to the financier.

How does a Commercial Hire Purchase (CHP) work?

During the hire term the client has all the benefits of ownership and use of the asset, whilst the financier retains the actual ownership of the asset.

The financier purchases the asset on behalf of, and as instructed by, the client, who then hires the asset back from the financier, paying fixed monthly rental payments. At the end of the term the customer can then take ownership of the asset, continue on with the CHP for any residual amount (that would have been agreed upon at the start of the term), or can trade the asset in for a new one.

Benefits to Business

  • Fixed interest rate, monthly repayments and lease term.
  • Rental instalments tailored to match your business cash flow.
  • Residual value (Balloon) may be used in the contract, lowering monthly payments.
  • No capital outlay required, although deposit or trade in may be used.
  • Fully tax deductible to the extent the asset is used for business purposes.
  • Applicable GST on purchase price of the asset can be included in amount financed.


  • Customers registered for GST may claim the GST on the initial purchase of the asset as an Input Tax Credit in their BAS.
  • GST is payable on the monthly payments and any residual value at the end of the term, and may be claimed as an Input Tax Credit in a client’s BAS.

For more information on Commercial Hire Purchase please contact us.