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Commercial Hire Purchase

What is a Commercial Hire Purchase?

Commercial Hire Purchase is also referred to as a Corporate Hire Purchase, Hire Purchase, Asset Purchase, HP or Term Purchase and is often abbreviated to CHP or HP.A Commercial Hire Purchase is a business finance product, where the customer hires a motor vehicle from the Bank or Finance Company for a set monthly repayment over a set term, normally 12 to 84 months.

Once the preferred finance choice of business vehicle and equipment purchases. The product is now only the second choose, making way to Chattel Mortgage.

How does a Commercial Hire Purchase work?

The Commercial Hire Purchase agreement is a contract where the finance provider (the “owner”) gives the hirer “You” possession and use of a motor vehicle in return for a regular fixed monthly repayment.

Once the final payment or balloon is made, the “hirer” takes ownership of the motor vehicle.

A Commercial Hire Purchase is generally suitable for companies using the “accruals” method of accounting for Goods and Services Tax (GST).

For individuals who use their motor vehicle for predominately business related purposes, Commercial Hire Purchase can be used, but a better finance agreement is a Car Loan. With a Car Loan you receive all the same taxation benefits, however in general exit fees for car loans are far less than Commercial Hire Purchase.

Commercial Hire Purchase Benefit:

A Commercial Hire Purchase can appeal to both companies and individual's and has many attractions. Some of the benefits include:

  • Depreciation on the motor vehicle and the interest component of the rental are tax deductible if it is used to generate income or the expense is required in carrying on a business.
  • The interest rate and monthly repayments are fixed for the term of the Commercial Hire Purchase.
  • If you registered for GST, you can claim the GST on the vehicle price. GST is not charged on the monthly repayment or balloon payment.
  • Terms range from 12 to 84 months.
  • A Commercial Hire Purchase can be arranged with no deposit (100% finance) or an amount entirely up to you

Who does a Commercial Hire Purchase suit?

Commercial Hire Purchase is generally suitable for companies using the “accruals” method of accounting for Goods and Services Tax (GST).

If you are an individual and you use your vehicle predominantly for business use, this product may suit you, however in most cases a Car Loan will be more beneficial.

Terms and Balloons of a Commercial Hire Purchase

These are the standard terms and balloons:

  • 7 years No Balloon Applicable
  • 6 years No Balloon Applicable
  • 5 year/ 30% balloon
  • 4 year/ 40% balloon
  • 3 year/ 50% balloon
  • 2 year/ 55% balloon

Note: the balloon is an option and in most cases can be varied depending on your circumstances.

Want to Know More

Please complete the enquiry form and we will have an experienced Commercial Hire Purchase consultant call you within a few hours.

Still not clear and want to know your chance of financial application success? Call us now on 1300 583 022 or fill out the contact form for a Free Confidential Consultation.


Phillip Gruppelaar - Senior Finance Manager

Commenced in the Finance Industry in 1988. Phillip has been a senior manager in finance businesses since the mid 1990's. This included 5 years as General Manager of one of Australia's largest and most successful Finance Brokerage Businesses. Phillip is a General Asset Finance specialist

Have questions? Live chat with Phillip!

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George Carver - Senior Finance Specialist

Commenced with National Australia Bank in the early 1970's. A Custom Credit Branch Manager by 1978.

For the last 20 years he has run Carver Financials, he joined forces with Harley Finance in 2012.George is a Truck, Equipment & Machinery Finance specialist.

Have questions? Live chat with George!

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