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

Key highlights

• The lender owns the truck during the term; ownership passes to you at the end
• Fixed repayments over the term make budgeting and cash-flow planning simple
• Balloon or residual payments can reduce regular repayments if you need to
• Often suits operators reporting on an accruals basis, subject to accountant advice
• One application compares 80+ lenders to find the sharpest CHP terms for you

How commercial hire purchase works

Under a commercial hire purchase the financier purchases the truck you have chosen and then hires it back to your business for a fixed term. You have full use of the truck throughout, and you make regular hire payments that steadily reduce the balance. Legal ownership stays with the lender until the very last payment, at which point title automatically passes to you and the agreement ends. It sits somewhere between a lease and a chattel mortgage: you are working toward ownership like a loan, but the lender holds title along the way rather than simply taking security. For many operators that structure has been the traditional route to owning a prime mover or rigid outright.

Repayment structure and balloon options

Repayments are usually fixed for the life of the agreement, which makes CHP easy to budget around when your freight rates and margins are known. Terms commonly run from 1 to 7 years, and you can often reduce the amount financed with a deposit or a trade-in. As with other truck finance, you can build in a balloon or residual payment, a larger amount owing at the end that lowers your monthly hire payments and eases pressure on working capital. When the term finishes you pay any remaining balloon and the truck becomes yours. Structuring the balloon to match how long you plan to keep the truck, and how hard you will work it, is key to keeping repayments comfortable.

How CHP differs from a chattel mortgage and lease

The three structures look similar but differ in who holds title and how tax applies. With a chattel mortgage you own the truck from day one and the lender only takes security. With a lease the financier owns the truck and you rent it, with the option to hand it back. Commercial hire purchase sits in between: the lender owns it during the term, but you are contracted to buy it and ownership transfers automatically at the end. This affects GST timing and how repayments are treated, which is why the right choice depends on your accounting method and goals. We help you weigh these differences in plain English so the decision is clear.

Tax and GST considerations

Because the lender holds title during a hire purchase, the GST treatment can differ from a straightforward purchase. Depending on how your business is registered and whether you report on a cash or accruals basis, the GST on the truck and on the finance charges may be claimed differently over the agreement. Generally the interest or finance charge component and depreciation on the truck can be deductible to the extent the vehicle earns income, but the mechanics vary with your setup. These rules also change over time, so treat this as general guidance only. Your accountant can confirm exactly how a CHP would be treated for your business before you sign anything.

Who commercial hire purchase suits

CHP tends to suit operators who want to end up owning the truck but prefer the lender to hold title along the way, and businesses whose accounting method makes the CHP tax treatment attractive. It works well for owner-operators and fleets buying a truck they intend to keep and run hard for years. If you value fixed, predictable repayments and a clear path to ownership without the up-front GST timing of a chattel mortgage, it can be a strong fit. Operators who want to upgrade frequently or keep the truck off the balance sheet may prefer a lease instead. Comparing the options against your own numbers is the best way to be sure.

Eligibility, rates and settlement speed

Lenders generally want an active ABN, reasonable credit and evidence the business can meet the payments. Well-established operators with clean financials usually secure the sharpest terms, while newer businesses can still be considered subject to lender criteria, and low-doc options may use bank statements or BAS in place of full financials. Funding is available from around $20,000 up to $10 million and beyond, indicative and subject to assessment, with rates from around 6.55% p.a. for strong, asset-backed deals and higher for older trucks or weaker profiles. For eligible applicants, same-day pre-approval and settlement within 24 to 48 hours may be possible so you can collect the truck quickly.

Why compare 80+ lenders through one broker

Not every lender still offers commercial hire purchase, and those that do vary in pricing, balloon limits and how they view different freight sectors. Chasing that down yourself, lender by lender, is slow and can mean multiple credit enquiries. Instead, we lodge one application and compare more than 80 banks and non-bank lenders to find who offers the most competitive CHP for your truck and your business. You deal with a single dedicated broker who explains the trade-offs, handles the paperwork and lines up the best available structure, whether that turns out to be a hire purchase or a different product altogether.

If commercial hire purchase looks like the right way to fund your next truck, an obligation-free quote is the easiest place to start. Share a few details about the truck and your business and we will compare more than 80 lenders to show indicative rates, balloon options and repayments built around you. The first enquiry is only a soft credit check, so it will not affect your credit score, and for eligible applicants fast approval and quick settlement may be available. Get in touch today and let us find the structure that works hardest for your business.