What is a Commercial Hire Purchase (CHP)?
A CHP allows you to hire your vehicles or assets from a lender for a fixed term, including new or used equipment. You can choose to have a balloon payment at the end of the lease, reducing your monthly repayments, or you can choose no balloon payment with a higher monthly repayment. A CHP is a great option for those who want to own their assets at the end of a lease.
How does it work?
You choose, or our team of experts can help you select a new or used vehicle or equipment that’s suitable for your business and support you in having it built to specification for your business needs. We then help you with your financing solution.
The difference with a finance lease is the individual/business takes full ownership risk without transferring legal ownership.
What’s the difference between a CHP, Operating Lease and Finance Lease?
Any options are good ways to finance your assets. However, the one you choose depends on what suits your business needs. With a CHP, the Hirer pays the cost of the equipment in different instalments over a period of time and has the right to terminate the agreement any time before taking the title/ownership of the asset upon the final instalment. The Hirer claims the depreciation on the asset as an expense. In an Operating and Finance Lease, the lessee does not have the option to purchase the asset. However, the business gains the benefits of utilising the asset, and lease payments are shown as an expense and are not recorded on the balance sheet. In addition, repair and maintenance are covered under an Operating Lease and is the responsibility of the lessee with a Finance Lease.