Also called: Commercial hire purchase, CHP
Hire purchase
Hire purchase is a contract where the financier owns the asset and hires it to your business, with ownership transferring automatically once the final instalment is paid. It is sometimes called commercial hire purchase and is now much less common than the chattel mortgage.
What is a hire purchase?
Hire purchase is a contract where the financier owns the asset and hires it to your business, with ownership transferring automatically once the final instalment is paid. It is sometimes called commercial hire purchase and is now much less common than the chattel mortgage.
Example
A workshop takes a $45,000 hoist on commercial hire purchase over 48 months and takes title automatically with the last payment.
Why it matters
It sits between a lease and a loan, and its GST timing differs from a chattel mortgage — worth confirming with your accountant before choosing it.