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“Offer to Hire” or Commercial Hire Purchase

Here is the second installment on the different lease products available.

A Commercial Hire Purchase (CHP) is often referred to as “Offer to Hire” and allows you to pay monthly repayments to the financier who buys the asset on your behalf.

The key points are:

  • CHP is when the lender purchases the asset and then ‘hires’ it back to the customer
  • The customer must hold an ABN (Australian Business Number) or ACN (Australian Company Number)
  • The product must be primarily for business purposes
  • Once the final installment has been paid the ownership of the asset is transferred automatically to the customer.


The benefits to you of this type of lease.

While the legal ownership of the asset rests with the lender during the contract period, the customer can enjoy all the benefits of full ownership of the asset. (This is often referred as quiet possession.)

The length of the lease can be between 12 to 84 months

No deposit is required, so 100% of the value of the item can be financed and therefore reducing the effect on cash flow and preserving working capital. Fees and charges can also be included into the total amount to be financed.

Payments can also be set up and matched against the income flow from the business, this enables easier cash flow management.

The item being financed is normally enough security for the finance and, therefore, won’t tie up other assets.

This type of lease can be set up with or without a “balloon”. A balloon is the payment to the finance institution after the lease has finished. The balloon does little to your overall tax claim, and its main benefit is to suit individual budgets and affordability. Length of the contract may be limited if you choose to have a balloon included.

A customer may be able to claim taxation benefits. Check with your accountant or finance advisor if this is suitable for you.

Contact us if you have any questions on this or any other lease that you are interested in.

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