Loan Products
Flexible, Cost-Effective Commercial Hire Purchase

Commercial Hire Purchase, often referred to as CHP, HP or just Hire Purchase, is a form of commercial loan used by many businesses for the purchase of many goods and assets. The business loan structure is relatively straightforward with fixed rates and terms and effective tax and other benefits.

Business Finance Flexible, Cost-Effective Commercial Hire Purchase

truck finance Comparison
Compare Commercial Hire Purchase (CHP) Interest Rates Against Other Loan Products

Interest rates vary across the product options available to operators for asset acquisitions. Compare the interest rates that we are currently achieving across our portfolio to assist in product selection and planning. Use the table as a calculator to compare lending products and different purchase options. For a specific quote, contact us.

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Disclaimer: This interest rate table is provided purely for the purpose of comparing interest rates currently achievable on different types of commercial lending. Using the chart does not imply an application has been approved or an offer made. Lender and broker fees and charges have not been included in their entirety in the calculations. Using this device is not an application form. Any offer you are made by a lender may vary in terms of the interest rate and repayment amount compared with the data displayed.

8 June

Today's best rate

Finance Equipment From

6.85 % Fixed

* The interest rate is calculated on a secured loan for business use, effective 08/06/2023 and subject to change. Warning: the interest rate is only true for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different interest rate.

8 June

Today's best rate

Finance Equipment From

6.85 % Fixed

* The interest rate is calculated on a secured loan for business use, effective 08/06/2023 and subject to change. Warning: the interest rate is only true for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different interest rate.

Commercial Hire Purchase Calculator

How to Use a Commercial Hire Purchase Calculator

To assist with preparing budgets for new acquisitions and to compare different makes and models of goods, operators can take advantage of a business funding calculator. Simply enter the amount required for the funds, the preferred term and balloon and the interest rate applicable to the credit product selected. An estimate on repayments based on those values will be displayed.

Finance Calculator

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Understanding this Financing Option
What Is a Commercial Hire Purchase?

The word ‘hire’ can be misleading with this financing product. This is a credit product with the outcome of ownership of the goods being financed. With an agreement of this type, the lender purchases the goods in title, and the borrower makes repayments in instalments.

The borrower has full control and responsibility for the goods over the term of the agreement. During that term, the borrower must meet all the operating expenses for the goods which may include registration, insurance, maintenance, servicing and other repairs.

When all instalments and any balloon amount are finalised, the ownership of the goods is transferred from the lender to the borrower.

  • Balloon is optional – this is an amount which is set aside for payment at the end of the term, when the all instalments are finalised.
  • Fixed interest rate applies.
  • Fixed terms from 12mths/1yr to 84mths/7yrs.

Compatible with both cash accounting and accruals methods of accounting.

Exploring the Tax Benefits
Commercial Hire Purchase Tax Benefits

Tax deductions apply to all forms of business credit. For this type of agreement, the instalments payable each month are not a direct tax deduction. The interest portion of the repayment is a tax deduction.

A deduction is realised through depreciation of the goods being funding. The depreciation schedule for business assets is set by the Australian Taxation Office. A set percentage of the value of the goods is an allowable deduction over multiple years until the goods are fully expensed.

Maximising Financial Benefits
How to Claim GST on Hire Purchase

GST is applicable to goods being funded under this type of credit. For operators that are registered for GST, the GST applicable to the purchase may be claimed in full, on the next corresponding Business Activity Statement. Under ATO rulings, this method of claiming GST is applicable to operations that utilise both the accruals and the cash accounting method.

Choosing the Right Path
Compare Finance Solutions: Lease vs Commercial Hire Purchase

When acquiring assets, operators have a choice of a number of credit products. These each have their own set of features and benefits and vary with the interest rate applicable and how a tax deduction is realised.

This hire type of agreement has similarities to Leasing in that the lender retains ownership of the goods over the term. The differences between the two are in the interest rate that typically applies and the tax deductible elements.

Leasing typically attracts a higher interest rate. The monthly lease payments are tax deductible as a business expense.

To assist with selecting the most suitable credit product, operators are advised to refer to the accountant.

Making Informed Decisions
Comparing Solutions: Chattel Mortgage vs Hire Purchase

In selecting a credit product for acquiring goods, operators may compare the features and benefits with Chattel Mortgage.

This hire type of agreement has similarities to Chattel Mortgage in a tax deduction is realised through the depreciation of the assets. Both also typically attract the same or very similar interest rates across the lending market.

To assist with selecting the most suitable credit product, operators are advised to refer to the accountant.

Exploring the Spectrum
Typical Types of Hire Purchase Loans

This credit facility can be a highly suitable and effective option for funding a wide range of business assets.

  • Truck Hire Purchase – all types of new and second-hand trucks including light, medium and heavy duty with all types of bodies and trailers. Truck-trailer combination funds and cab only funding may be sought.
  • Van Hire Purchase – vans from all leading makes, models and fuel types including new and used models.
  • Equipment Hire Purchase – plant, machinery and equipment deemed for use in a business operation may be considered for this type of funding.
  • Commercial Business Loans – a range of general options may suit this type of funding.

Finding the Perfect Fit
How to Source Commercial Hire Purchase

The full selection of funding for business operations can be sourced through banks and non-bank lenders. Some lenders may specialise in certain industries such as mining or construction or in certain categories such as heavy equipment or motor vehicle lending. Others will offer funding across the board for all industries and goods.

Lenders will operate with their own criteria and guidelines around approving applications. Some may have criteria for the minimum or maximum loan amount and criteria around the profile of applicant. In some instances, applicants must have been trading for a minimum of 12-24 months to be approved.

Finance brokers can assist operators to source the most appropriate lender to meet their requirements.

Flexible Financing for Every Business
Get CHP for Many Business Types and Structures

To be eligible for business credit products, operators must have an ABN as a minimum. This type of credit product can suit all types of Australian business structures and formats.

Operators should consult with their accountant in determining what is the most workable and compatible credit product for their individual set-up and to meet their objectives.

  • Small Businesses in Australia
  • Family Operations
  • SMEs
  • Family Trusts
  • Unit Trust Operations
  • Sole Traders
  • Partnerships
  • ABN Holders
  • Companies
  • Corporations

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Commercial Hire Purchase FAQs

This lending type is also referred to simply as Hire Purchase by some banks and lenders. This type of commercial finance facility has historically been quite a popular form of finance and suits many businesses for a wide range of business equipment and other purchases. To expand on the information provided on the dedicated webpage, please review these more specific answers to direct questions. For a quote or for further information, contact our team for individual assistance.

Commercial Hire Purchase is arranged with a fixed interest rate. The rate is fixed for the entire term of the loan. The fixed rate does not change with fluctuations in interest rates as a result of Reserve Bank monetary policy decisions.

All types of businesses can apply for this type of finance. The suitability of a particular finance product for a business is dependent on the financial objectives of the business; the approach to the balance sheet; the accounting method used; and general business objectives.

Where a business does not have all the documentation and financial records to complete a finance application form, they may seek Low Doc and No Doc finance. These are descriptions on the application not a specific loan type. Once approved by a lender for a No Doc loan, the business may select Commercial Hire Purchase or another type of loan.

Yes. This loan product is suitable for the purchase of many types of business assets including motor vehicles. Both new and used cars of all types can be financed with CHP.

Deciding which is the most suitable loan product for a business depends on individual aspects of the enterprise. These include the general and financial objectives; the method of accounting; the approach to the balance sheet; treatment of GST; approach to tax; and others. Business owners are encouraged to speak with their accountant to discuss if CHP is the most appropriate loan product for their operation.

If a business with bad credit is approved by a lender for finance, they may have their choice of loan products including CHP, depending on lender approval.

Yes. Hire Purchase is a versatile business loan product which can be used for a wide selection of assets including excavation and earthmoving equipment, machinery used in civil works, construction and related industries. The suitability of the loan type is primarily dependent on suitability to the business structure not the asset being acquired.

Commercial Hire Purchase can be used by businesses that use either the cash accounting method or the accruals method of accounting. The cash accounting method is widely used by Australian businesses. It accounts for income and expenditure at the time of the transaction. The accruals method accounts for accounts receivable and accounts payable at the time the invoice was issued or received.

No, deposit finance is where the full purchase price of the goods being financed is included in the loan amount. For Commercial Hire Purchase as with other loan products, the total loan amount is subject to lender approval.

A finance calculator can be used to compare estimated repayments on different goods and for different finance products. The interest rates differ with the range of loan products. When using a calculator to compare products, enter the relevant interest rate while keeping the other values constant. An online finance calculator provides estimates only and is not a specific quote or offer.

No. With this type of finance, the GST on the asset purchase price is claimed on the corresponding BAS return following purchase. With the full amount of GST claimed, no further GST is applicable to be charged or claimed. GST is applied to the loan repayments.

The balloon is a set portion of the loan amount which is set aside for payment in full at the end of the loan term. The balloon may be paid in a lump sum by the business or a new loan applied for to refinance the amount.

Finance terms offered on CHP may depend on the lender. Some lenders may have maximum terms, others may be more flexible. A finance term of up to 7 years can be sought. The length of the term is subject to lender approval and forms part of the application assessment procedure.