Asset finance · hire purchase
The lender owns it until you've finished paying.
Traditional structure where the financier owns the asset and you make hire payments until the final purchase happens. Less common today than chattel mortgage but still relevant for certain tax structures and second-hand assets.
What it is, when it fits
Plain English, with the trade-offs.
Under hire purchase, the lender owns the asset and hires it to you across an agreed term. Each payment includes a portion of principal and interest; ownership transfers to you with the final payment. Hire purchase predates chattel mortgage and was the default asset finance structure for decades. It's now less common because chattel mortgage offers a cleaner GST treatment for ABN holders (claim GST upfront on the purchase rather than across the life of the loan). Hire purchase still has a place: partnerships not yet GST-registered, businesses preferring an off-balance-sheet treatment, certain second-hand assets banks won't chattel-mortgage, or assets acquired through dealer arrangements that default to HP. Pricing is comparable to chattel mortgage (6% to 12% p.a.). Term lengths and repayment structures look similar; the meaningful differences are tax treatment and ownership timing.
Pen on a settlement document, two people deciding together.
Typical scenarios
Business buying a used asset banks won't chattel-mortgage
Why: Specific used asset outside chattel-mortgage age policy.
Outcome: HP via specialist asset financier, standard 5-year term.
Partnership not yet GST-registered
Why: New partnership establishing trading; GST registration pending.
Outcome: HP avoids the GST timing complexity until registration completes.
Business preferring not to depreciate
Why: Tax structure benefits from lease-style accounting.
Outcome: HP leaves the asset off the balance sheet under some accounting treatments.
Asset acquired through dealer with HP arrangement
Why: Dealer's default finance partner offers HP only.
Outcome: HP accepted because dealer rate beats broker chattel-mortgage on this specific deal.
Lenders for this product
Who we work with.
- Pepper Asset Finance
- Angle Finance
- Metro Finance
- Allied Credit
- Liberty Commercial
Lender accreditation varies; not every lender is available for every deal. We pick from the panel based on your specific situation.
How it works
From brief to settlement.
- 01
Tax-structure check
Before recommending HP we coordinate with your accountant on whether HP's tax treatment actually fits your situation, or whether chattel mortgage would be better.
- 02
Lender selection
Three or four specialist asset financiers cover most HP scenarios. We submit to the strongest current rate fit.
- 03
Approval and supplier coordination
Approvals usually return inside 48 hours. We coordinate documentation and supplier release directly.
- 04
Settlement and ongoing
Hire payments commence per the agreed schedule. Ownership transfers on final payment; we follow up if early payout makes sense.
Indicative pricing & terms
Ranges, not promises.
Rate range
6 to 12% p.a.
Loan size
$10K to $2M
Term
1 to 5 years
Security
Lender owns the asset until final payment
Indicative only; specific pricing depends on lender, security, and your business profile.
Frequently asked
Honest answers, plain English.
Hire purchase vs chattel mortgage tax treatment?
Chattel mortgage: claim GST on the purchase upfront in the next BAS. Hire purchase: claim GST on each instalment as you pay it. For most profitable ABN holders the chattel-mortgage treatment is materially better, which is why HP is now less common.
GST timing?
Under HP, GST is included in each payment and claimable in the BAS where it's paid. Total GST paid is the same as under chattel mortgage; the timing differs.
When does the asset become mine?
On the final payment, sometimes after a small "option to purchase" fee. Until then, the lender holds legal title and you hold use of the asset under the hire agreement.
Default and repossession?
Because the lender owns the asset, repossession on default is structurally easier than under chattel mortgage (where the lender enforces a security interest). Default protections under credit law still apply for in-scope agreements.
Early termination fees?
Most HP agreements allow early termination with rebated unearned interest, sometimes a small fee. Specifics vary by lender; we confirm the early-termination treatment before signing.
Suitability for partnerships?
HP can suit partnerships not yet GST-registered or with complex multi-partner tax structures. Speak to your accountant about whether HP's instalment-GST treatment helps your specific tax position.
Related products
If this isn't quite the fit.
Next step
Twenty minutes, no obligation.
Tell us the shape of the deal and the timing. We'll send a lender shortlist for hire purchase or, if it isn't the right fit, an honest signal of what is.