Finance question
What is a commercial hire purchase (CHP)?
A commercial hire purchase is a core asset-finance structure where the lender buys the asset and hires it to your business over a fixed term. You make regular payments, use the asset from day one, and take ownership once the final payment is made.
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The short answer
You use it now, own it at the end
A commercial hire purchase, or CHP, is one of the most common ways businesses fund vehicles and equipment. The lender purchases the asset you have chosen and hires it to your business over an agreed term. You have full use of it from the start and pay it off in regular instalments.
The key feature is ownership. Throughout the term the lender holds title, which is what secures the finance. Once you make the final payment, title transfers to your business and the asset is yours outright. It is a straightforward path from using an asset to owning it.
CHP suits businesses that want the asset on their books and predictable repayments. It sits alongside other structures like leases and chattel mortgages, each with different ownership and tax treatment. A broker helps you weigh which fits your situation, and your accountant confirms the tax side.
Do you qualify?
What a CHP typically needs.
A specific asset
A vehicle or machine the finance is secured against.
An active ABN
Sole traders and companies both qualify.
Business use
The asset is used mainly for business purposes.
A term that suits
Repayments set over a fixed period, sometimes with a balloon.
Why businesses choose CHP
Clear ownership path
You own the asset outright at the end of the term.
Predictable payments
Fixed instalments make the cost easy to plan around.
The asset secures it
Title held by the lender keeps the structure straightforward.
A real example
A transport operator chooses a $120,000 prime mover on a CHP. The lender buys the truck and hires it over a set term with fixed monthly payments. The operator runs the truck from day one, and once the final payment clears, the truck is theirs. Illustrative only. Confirm tax treatment with your accountant.
Common questions
Frequently asked questions
Who owns the asset during a CHP?
The lender holds title through the term, which secures the finance. Ownership transfers to your business once the final payment is made.
How is CHP different from a lease?
With a CHP you own the asset at the end. A lease is more like renting, with different ownership and tax treatment. Your accountant can advise which suits.
Can a CHP include a balloon payment?
Often yes. A balloon lowers regular repayments with a larger final amount. A broker structures the term to suit your cashflow.
Do I need full financials for a CHP?
Not always. Many CHP deals are low-doc or no-doc, secured by the asset, subject to lender assessment.