How commercial hire purchase works for trailer finance — and how it differs from chattel mortgage and finance lease.
Common Questions
Frequently Asked Questions
Under CHP, the lender purchases the trailer and hires it to you. You make regular repayments and take ownership at end of term. It is similar to chattel mortgage but with different accounting and tax treatment.
Under a chattel mortgage you own the trailer from day one. Under CHP, ownership transfers at the end of the term when the final payment is made. The tax treatment also differs — consult your accountant.
CHP has declined in popularity since chattel mortgage became the dominant commercial trailer finance product. However, it is still available and may suit certain business structures. Your broker can advise.
GST treatment under CHP differs from chattel mortgage. Under CHP, GST is claimed on each repayment rather than upfront. Your accountant should advise on the most effective structure for your GST position.
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