Compare & Consider Commercial Hire Purchase Asset Finance

Known by its full name or by the initials CHP or HP, this is a credit facility which may suit many enterprises to acquire a range of assets. The interest rate is competitive and it provides. effective tax benefits. This is one of several credit facilities available to businesses seeking cost-effective financing for new and used trucks, cars, plant, machinery and equipment.

Compare Commercial Hire Purchase Rates

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Fast Comparisons of Commercial Hire Purchase Rates with Other Financing Products

The interest rate on business financing facilities vary with the product itself, across the lending market and for individual businesses. Lenders typically display their lowest achievable rate for operators to use as a guide to what is available. This table enables fast comparisons of the range of asset acquisition financing facilities based on interest rates.
Quickly Compare Commercial Hire Purchase Rates Against Other Financing Options

Types of Goods and Assets Financed with Commercial Hire Purchase

All types of assets and assets may be suited for financing with this form of business credit.

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Heavy Vehicle and Truck Financing by Commercial Hire Purchase

Light-duty, medium-duty and heavy-duty vehicles of varying body and trailer types, diesel and energy-efficient fuel systems, new and used may be financed.

Hire Purchase Commercial Vans

New and second-hand vans from all manufacturers, used in a business operation may be financed with this facility.

Plant, Machinery and Equipment Finance CHP

Goods for business use of all types may suit this financing product. Assets including yellow goods, wheeled goods, IT and computers, medical equipment, excavators and earthmoving machinery, agricultural and farming machines, and all other plant, machinery and equipment across Australian industry.

CHP Commercial Loans

Many of the general business purposes may be financed with this facility.

How to Get HP Repayment Estimates Using a CHP Calculator

An online hire purchase calculator is a useful resource for business owners to calculate estimates of possible monthly repayments based on varying terms, loan amounts, balloon and interest rate. Users can enter the amounts of their loan, the interest rate displayed, the preferred number of months/years to repay the finance and their preferred percentage for the balloon. The calculator immediately displays the result as an estimated repayment. Please read the disclaimer for the full details of using this calculator correctly. The calculator is ideal for compare credit products – compare with Lease, Rent-to-Own and Chattel Mortgage, and for comparing the different repayments for comparable goods at different purchase prices.
  • CHP calculator for comparing credit facilities, makes and models.
  • Easy way to calculate Commercial Hire Purchase repayments.
  • Free calculator use, no obligation.
Calculate CHP repayments

What is Hire Purchase or Commercial Hire Purchase?

This business loan product can lead to some confusion due to the name implying a form of rental or hiring agreement. This is incorrect. This loan type is a facility for financing assets where the business owns the goods at the conclusion of the loan when all commitments are finalised.

The technical explanation of this loan is that the lender acquires the assets and hires them to the business while the business repays the commitment in monthly loan instalments. While the lender may have ownership, the business is has full usage of the assets and must cover all outgoings in relation to the maintenance, service and running costs.

A balloon is an optional inclusion in this loan form. That is a percentage of the loan total which is payable in full after the final instalment is made. The amount of a balloon is subject to lender approval.

A unique feature of this type of credit facility is that it suits businesses that use either the accruals or the cash method of accounting. Other facilities suit one or the other accounting methods. When considering any credit product, it is advised that business owners discuss the selection with their accountant to ensure it is compatible with their accounting methods and objectives.

  • CHP suits accruals and cash accounting.
  • Fixed rate of interest.
  • Fixed HP term – 1 year to 7 years available.
  • Fixed monthly instalments.
  • Balloon option.

How GST is claimed with CHP

Businesses that have registered to claim GST may claim the full amount of GST that is charged on the goods being financed – truck, car, equipment, on the ensuing BAS return. With the total amount of GST pertaining to the acquisition accounted for with the claim, GST is not applied to the monthly instalments. According to ATO guidelines, this approach to GST applies to businesses that use both cash and accruals accounting.

Tax Deductions with Hire Purchase

All business financing facilities provide tax deductible elements but the way these are realised varies with the loan type. With this facility, the monthly instalment is not deductible except for the interest component which is a deduction.

The tax deduction is received when the asset is depreciated over time in accordance with the Australian Tax Office schedule. Depreciation allows for a certain percentage of the asset value to be deducted from taxable income over a certain number of years. This is affected in the annual accounts and business tax return.

Business Structures Suited to Commercial Hire Purchase

This credit facility can be suitable for many enterprise set-ups and structures with the ultimate decision resting on whether or not the overall features are compatible with the accounting practices and goals for the business. It is advisable for owners to speak with an accountant to assist in deciding if this will work with their structure and deliver the optimum outcome.

  • CHP may suit Sole Trader Loans, Self-employed, ABN-only Loans.
  • Partnerships, Family enterprises, Family Trusts, Unit Trusts Hire Purchase Finance available.
  • HP for SMEs, Small enterprises in Australia.
  • Commercial Loan Purchase for Companies and Corporations in many industries.

Compare Commercial Hire Purchase with Chattel Mortgage Solutions

Many of the features of this financing product are similar to Chattel Mortgage but there are also differences. Both are compatible with the cash accounting method and both deliver a tax benefit via asset depreciation. Across the lending market, both usually attract the same rate of interest.

A key difference is that Chattel Mortgage is not suited to the accruals method of accounting. For a full comparison in order to make financing decisions, business owners are directed to speak with an accountant.

Comparing HP and Leasing Solutions

This form of financing also has differences and similarities with business Lease financing. A Lease agreement is a similar concept to the agreement with this loan and both are suitable for businesses implementing accruals accounting.

There are differences in tax deductions in that Lease payments are tax deductible and that form of financing does not allow for asset depreciation. Leasing has a residual rather than a balloon and the residual may be subject to ATO guidelines while a balloon is negotiated with the lender.

Lease rates are typically slightly higher across the market. Discuss both options with an accountant to decide which would be the most workable financing for your asset acquisitions.

How to Apply for Hire Purchase Asset Financing

Most banks, finance companies and other non-bank lending institutions will include this form of credit in their portfolio. Applications may be submitted via online forms or by phone with the selected lender or broker.

Applicants will be required to provide financial documents as per the business credit application procedures. Where full financials are not available, business owners may seek Low Doc options.

  • ABN required for Commercial Hire Purchase.
  • GST registration is not stipulated for eligibility.
  • Business financials and documentation required as per commercial credit requirements.
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* The comparison rate displayed is calculated for a loan of $30,000 over 5 years. The results from this calculator should be used as an indication only. Quoted repayments are based on advertised rates and do not include lender fees and charges. Results do not represent either quotes or pre-qualifications for a loan. The specific details of your loan will be provided to you in your loan contract. It is advised that you speak with us so that we can provide you with advice that is tailored to your situation.

DISCLAIMER: This comparison chart is provided for general reference purposes only. It is not in any way intended as a loan application, it is not a quote for business finance or any indication that an application has been received or approved. The rates quoted are for business use where the funds are predominately for business use and may not include all the fees and charges that may be applicable. The interest rates and the repayments displayed do not account for any conditions pertaining to your individual loan application. Therefore the interest rate and repayment you may be offered may vary from the amount shown.

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Commercial Hire Purchase FAQ's

  • A balloon is payable in full at the conclusion of the term. It may be paid via cash resources or refinanced.

  • All business loan products may suit start-up businesses, depending on lender approval. A No Doc option may be required if full financials are not available.

  • Yes. Used vehicles may be financed with the business’ choice of credit facility.

  • Yes. The rate is typically the same as Chattel Mortgage which is the lowest rate across the business financing product range.

  • All business structures can suit all types of business financing products. The decision is based on the suitability of the features and benefits of each facility to the business set-up and its objectives.

  • Lease is only suited to accruals accounting not cash accounting, the structure of the facility varies and there are differences with the interest rate. Lease has a residual option which varies from a balloon.

  • Alternative credit facilities for financing trucks include Lease, Rent-to-Own and Chattel Mortgage.

  • The minimal requirement for eligibility for business finance products is to hold a current Australian Business Number.

  • No deposit financing is subject to lender approval but is widely available.

  • Yes. The full selection of commercial credit facilities may suit financing agricultural machines.

  • No. The interest component is a deduction but the main deduction comes when the asset is depreciated when preparing the income tax return and annual accounts.

  • Terms of as short as 1 year and up to 7 years can be approved with this type of loan.

  • When purchasing goods with commercial credit, the business will wholly own the goods when all repayments and any balloon amounts are finalised.

  • The balloon is that agreed portion of the financing total that is paid in full at the conclusion of the loan term.

  • This is a credit facility for the purchase of business goods and assets not a rental arrangement.