Commercial Hire Purchase Explained: How It Works, Rates & Who It Suits

Key highlights

• The lender owns the machine until your final payment, then title transfers to you
• Fixed repayments make project budgeting and tendering predictable
• Balloon or final instalment options can ease monthly cash flow
• Suits operators who want certainty now and ownership later
• One application compares 80+ lenders for competitive CHP terms

How commercial hire purchase works

Under a commercial hire purchase, the financier purchases the machinery you have chosen and hires it to your business over an agreed term. You have full use of the excavator, loader or telehandler throughout, and you make regular fixed payments that cover the price plus interest. Legal ownership stays with the lender until the last instalment is paid, when title passes automatically to you. It sits between a lease and a chattel mortgage: like a lease, the financier owns the asset during the term; like a chattel mortgage, you are always heading towards outright ownership rather than handing the machine back. This makes CHP a comfortable middle ground for operators who like the idea of the financier carrying the asset during the term but ultimately want the loader, telehandler or tractor to become theirs once the last instalment clears.

Repayment structure and balloons

Repayments are generally fixed for the whole term, which usually runs one to seven years depending on the age and expected life of the equipment. That predictability makes CHP popular for contractors pricing jobs months ahead, because the monthly cost is locked in. You can often include a balloon or larger final instalment to reduce the regular payments, which helps when machinery is high-value or utilisation is seasonal. The trade-off is a larger sum owing at the end. Structuring the term and balloon around your work pipeline keeps repayments aligned with the revenue the machine generates. Some operators also time the balloon to coincide with a contract milestone or an expected equipment upgrade, so the larger final payment lands when the business is best placed to meet or refinance it.

Tax and GST considerations

With a commercial hire purchase the GST treatment differs from a chattel mortgage because you are hiring rather than buying outright at the start. Depending on your accounting method, GST may be claimed on the underlying purchase price or across the payments, and the interest component along with depreciation can generally be deductible where the asset earns assessable income. The interaction of hire purchase, GST reporting and depreciation is nuanced and changes with the rules of the day, so treat this as general information only and ask your accountant to confirm what applies to your business.

Who commercial hire purchase suits

CHP tends to appeal to businesses that want the discipline of fixed payments and the certainty of eventual ownership, without necessarily claiming the full GST up front. Plant hire firms, civil contractors, transport-adjacent operators and agricultural businesses often use it for tractors, loaders and materials-handling gear they intend to keep. It can also suit operators who prefer the machine held by the financier during the term for their own structuring reasons. If you want to own the asset from day one, a chattel mortgage may fit better; if you never want to own it, a lease is worth comparing. Because the three structures look similar on the surface but differ in ownership, GST timing and balance-sheet treatment, it is well worth putting them side by side rather than assuming hire purchase is automatically the right label for your deal.

Rates, loan sizes and speed

Indicative commercial hire purchase rates start from around 6.55% p.a. for well-presented, asset-backed deals, with older machinery, lower-doc applications or weaker credit priced higher and subject to lender assessment. Amounts commonly range from about $20,000 for a single machine up to $10 million or more for larger plant purchases. For eligible applicants, same-day pre-approval and settlement within 24 to 48 hours may be achievable, which matters when a machine needs to be on site for an imminent job. The stronger your financials and the newer the asset, the more competitive the terms tend to be. A deposit or trade-in is not always required, but offering one can bring the rate down and widen the pool of lenders willing to compete.

Eligibility and documentation

You will usually need an active Australian ABN, and for the best pricing lenders like to see trading history and a sound credit record. A full-doc CHP typically requires financial statements and tax returns, while lower-doc options may accept bank statements or BAS, which helps if your accounts are mid-year. Newer businesses can still be considered subject to criteria, especially with a deposit or a mainstream, readily resaleable machine. Making an enquiry through Overdrive is a soft credit check only, so you can weigh a commercial hire purchase against other structures without any impact on your credit score.

The advantage of comparing lenders

Every lender prices hire purchase differently and weighs equipment type, industry and balance sheet in its own way. Instead of chasing quotes one at a time, Overdrive lodges a single application and compares more than 80 banks and non-bank lenders, looking at rate, balloon options, fees and how quickly funds can settle. You work with one broker, Simon Kendrick, who handles the negotiation and paperwork end to end. That means you can be confident the CHP you sign is genuinely competitive rather than the first offer that came across the desk. On a multi-year facility for a high-value machine, even a small difference in rate or a more flexible balloon can add up to a meaningful sum, which is exactly what comparing the market is designed to capture.

If commercial hire purchase sounds like the right fit for your next machine, the simplest next step is to see the numbers. Ask for an obligation-free quote and we will compare more than 80 lenders on one application. The enquiry is a soft credit check that will not affect your credit score, and for eligible applicants fast approval and settlement may be on the table. Get in touch and we will help you structure a hire purchase with repayments and a balloon that suit the way your business earns. There is no cost to find out where you stand, and no obligation to proceed once you have seen the figures.