A commercial hire purchase (CHP) lets your business use a vehicle or piece of equipment straight away while paying it off over time — with ownership transferring to you once the final payment (including any balloon) is made. It is one of the oldest and most straightforward ways to finance a business asset, and for some tradies and businesses it still has real advantages over a chattel mortgage or lease. Here is how CHP works, how it is treated for GST and tax, and when it is the right structure.
What is a commercial hire purchase?
Under a CHP, the financier buys the asset and “hires” it to your business for an agreed term and repayment schedule. You have full use of the asset from day one, but the financier retains legal ownership until you have made every payment. When the contract ends and the balance (plus any residual or balloon) is paid, title passes to your business automatically. It must be used predominantly for business purposes to qualify.
How CHP compares to a chattel mortgage and a finance lease
These three structures look similar but differ on who owns the asset and how it is treated. For a deeper side-by-side on your specific asset, see our chattel mortgage vs lease vs hire purchase guide.
| Commercial Hire Purchase | Chattel Mortgage | Finance Lease | |
|---|---|---|---|
| Who owns it during the term | Financier (until final payment) | You (financier takes a mortgage over it) | Financier |
| Ownership at the end | Transfers to you automatically | Already yours | Option to buy at residual |
| Balloon/residual available | Yes | Yes | Yes (residual) |
| Typical GST treatment | GST on the asset price can be claimed up front (check with your accountant) | GST on the asset price can be claimed up front | GST is charged on the rentals |
| Best when | You want to own it and prefer a hire structure | You want ownership from day one | You want off-balance-sheet-style use |
GST and tax treatment depends on your circumstances and accounting method — always confirm with your accountant or registered tax agent.
GST, BAS and tax with a CHP
Because a CHP is treated as a sale for GST purposes, a GST-registered business can usually claim the GST included in the asset’s purchase price as an input tax credit — often in the BAS period the asset is acquired, subject to your accounting method. Depreciation and the interest component of repayments may also be deductible where the asset is used for business. The eligibility rules and any instant asset write-off thresholds change year to year, so get asset-specific advice.
What you can finance with a CHP
CHP works across most income-producing business assets:
- Work utes, vans and trucks
- Trailers and plant
- Excavators, skid steers and earthmoving gear
- Workshop and trade equipment
If you are buying equipment specifically, our equipment finance page covers the options, and you can estimate repayments with the equipment finance calculator.
Is a CHP right for your business?
A CHP can suit a business that wants to end up owning the asset, values a simple fixed-repayment structure, and can benefit from claiming GST up front. If you would rather hold the asset on your books from day one, a chattel mortgage may be a better fit. Self-employed or low-doc? Our low-doc finance options may still get you approved. CHP sits within our broader asset finance range.
Want to know what a CHP would cost on your next asset? Get a fast, obligation-free indication from a broker who works with tradies and businesses every day. Apply or get a quote →
Commercial hire purchase FAQs
What is a commercial hire purchase in simple terms? The financier buys the asset and hires it to your business; you use it immediately and pay it off over an agreed term, and ownership transfers to you once the final payment (including any balloon) is made.
Is CHP better than a chattel mortgage? Neither is universally better. A chattel mortgage gives you ownership from day one; a CHP keeps ownership with the financier until the end. GST outcomes are similar; the right choice depends on your accounting and cash-flow preferences — confirm with your accountant.
Can I claim GST on a commercial hire purchase? A GST-registered business can generally claim the GST in the asset’s purchase price as an input tax credit, often up front, subject to your accounting method and advice from your accountant.
Can I have a balloon payment on a CHP? Yes. A residual or balloon at the end lowers your regular repayments, with the balance due at the end of the term.
Does the asset have to be for business use? Yes — a CHP is a commercial facility and the asset must be used predominantly for business purposes.
General information only — not credit or financial advice. Tradie Finance operates under Australian Credit Licence 506065 (Five Tees Pty Ltd). GST and tax treatment depends on your circumstances; confirm with your accountant. Lending is subject to approval, lending criteria, terms, conditions and fees. Written and reviewed by the Finance Director at Tradie Finance.