Hire now, own at the end
Hire purchase: use the asset now, own it at the final payment.
A structure some lenders and accountants still prefer for particular assets. Your broker explains where it beats a chattel mortgage and where it does not.
What is a hire purchase?
Hire purchase is an asset finance structure where the financier buys the asset and hires it to your business for a fixed term, with ownership transferring automatically once the final instalment — including any balloon — is paid. It sits between a lease and a chattel mortgage, and is used less often in Australia since GST reforms favoured the chattel mortgage.
Under a commercial hire purchase the financier holds title while you hire the asset, and title passes to your business automatically on the final payment. Economically it behaves much like a chattel mortgage: fixed instalments, an optional balloon, and the asset serving as security. The difference is legal ownership during the term, which affects how the arrangement is documented and, for some businesses, how it is presented in the accounts.
Hire purchase was the dominant Australian structure until GST treatment changed the calculus. Under a chattel mortgage a GST-registered business can generally claim the full GST on the purchase price in its next BAS, which is a significant early cash-flow benefit. Because of that, most brokers and lenders now default to chattel mortgage for the same asset, and hire purchase survives mainly where a lender’s product set or an accountant’s preference calls for it.
It remains a legitimate structure and is still offered by parts of our panel. Your broker will only recommend it where there is a concrete reason — a lender’s appetite for a particular asset class, an existing facility being extended, or specific accounting advice — and will show the chattel mortgage numbers alongside so the comparison is visible.
Hire purchase at a glance
| Amount | $10,000 – $2,000,000 |
|---|---|
| Term | 12–84 months |
| Rate type | Fixed |
| Indicative rates (Q3 2026) | 7% – 14.9% p.a. · see rate history |
| Security | Secured by the asset |
| Repayments | Monthly |
| Typical speed | 24–72 hours for low-doc, longer for full-doc |
| Best for | Businesses wanting eventual ownership where a lender or accountant specifically prefers this structure |
| Consider something else if | Most GST-registered businesses, where a chattel mortgage usually delivers a better GST outcome |
| Tax | Interest and depreciation are generally claimable, and GST treatment differs from a chattel mortgage. Confirm with your accountant before choosing. |
Advantages
- Ownership transfers automatically on the final payment
- Fixed instalments with an optional balloon
- Secured pricing, well below unsecured lending
Trade-offs
- GST is generally not claimable upfront on the purchase price
- You do not hold title during the term
- Fewer lenders actively offer it than chattel mortgage
How to apply for a hire purchase
- 01
Confirm the asset and supplier
Quote or invoice, whether new or used, and the asset’s age and expected working life.
- 02
Compare against chattel mortgage
Your broker prices both structures on the same asset so the GST and ownership differences are visible in dollars.
- 03
Settle and take delivery
The financier pays the supplier, you take possession, and title passes at the final instalment.
Documents lenders commonly ask for
- ID and ABN
- Supplier invoice or quote
- Bank statements or financials depending on the amount
What people finance with a hire purchase
Lenders we compare for this
Angle Finance, Metro Finance, Flexicommercial, Pepper Money and others on our panel. See the full panel.
Estimate your repayments
- Number of repayments
- 48
- Total interest (est.)
- $14,928
- Total repaid (est.)
- $89,928
This calculator provides an estimate only and does not account for fees, charges or the specific terms a lender may offer. It is not financial advice or an offer of finance.
Key terms
What is hire purchase?
Hire purchase is a finance agreement where a financier purchases an asset and hires it to a business over a fixed term. The business has use of the asset throughout and takes legal ownership automatically once all instalments, including any final balloon, have been paid.
Hire purchase vs chattel mortgage
Under a chattel mortgage your business owns the asset from day one and the lender registers a security interest. Under hire purchase the financier holds title until the final payment. Chattel mortgage is now more common in Australia because GST on the purchase price is generally claimable upfront.
Does hire purchase have a balloon payment?
Yes. A hire purchase can include a final balloon instalment, typically 0–40% of the purchase price, which lowers the regular payments. Ownership transfers only once that final amount is paid.
Hire purchase FAQs
Is hire purchase still used in Australia?
It is far less common than it once was. Under hire purchase the financier owns the asset and you hire it, with ownership transferring automatically after the final instalment. Since the GST changes that made chattel mortgage more attractive for businesses accounting on a cash basis, most equipment lending is written as a chattel mortgage or lease instead. Some lenders still offer commercial hire purchase, and your accountant can advise whether it suits your circumstances.