Commercial Hire Purchases Explained

Some options can be difficult to understand when it comes to financing your next car. So, at Corporate Car Brokers, we have broken down each option, making it easy to decide which finance option is best for you. Commercial Hire Purchases have always been a less common option when it comes to car loans and it may be due to the lack of knowledge that surrounds this kind of finance option. However, a commercial hire purchase just may be one of the best options for your next car purchase.

What is a Commercial Hire Purchase?

Put simply, a commercial hire purchase, sometimes referred to as a CHP is when a vehicle is hired from the lender in return for a fixed monthly repayment over a set period. The main difference between a commercial hire purchase and other finance options is that during the repayment period, the lender has full ownership over the car. Then, once the car is paid off entirely, including any interest charges included, the customer then takes full ownership of the vehicle.

How do Commercial Hire Purchases Work?

In the agreement of a CHP, the lender actually purchases the vehicle on the behalf of the customer and hires it back to the customer over the set period agreed upon. Although the customer does not have ownership of the vehicle, they do have full use of the vehicle over the time period.

What are the Benefits of a Commercial Hire Purchase?

There are many benefits of a CHP as there are with other types of loans. In a CHP, a flexible loan repayment period is installed over a period between two to five years. Usually, an option to set a final balance payment or residual payment between 0%-50% of the overall car payment is also available. This means that if the customer has a forecast of a higher income in future years, they are able to pay a lesser amount and pay the balance at the end of the loan period. There is also an option to make a deposit at the start of the loan in order to reduce the overall amount borrowed. This also means that the overall interest on the loan will be reduced as well. The main benefit of a CHP for businesses is that it has the potential to claim the vehicle as a tax deduction if the car is being utilised for tax purposes. So even though the car is not owned by the customer, the tax benefits are still available. This also includes the potential to claim Input Tax Credits if the customers business is registered for GST.

So, if you think a Commercial Hire Purchase is the most suitable option for your next car purchase, contact Corporate Car Brokers on 1300 539 010 to find out more or visit for more information!

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