Commercial Hire Purchase (CHP) is an agreement whereby the lender as the owner of the equipment, gives the “hirer” (business) possession of the equipment in return for regular rental payments. Upon the final payment being made, the “hirer” becomes the owner and therefore ownership passes to them.
A deposit can be made towards the purchase however 100% finance is generally available with no further security required.
As the business enjoys possession of the equipment during the CHP term, they are able to claim depreciation and the interest charges of the agreement as business tax deductions.
The interest rate is fixed for the term of the CHP agreement.
A Final or Balloon Payment may be structured into the CHP agreement thereby keeping the monthly repayment at a level manageable within the business cash flow. The Balloon payment may be paid out in full at the end of the term, or may be refinanced and extended for a further agreed term subject to a satisfactory credit assessment
