What's the difference between a commercial hire purchase and a chattel mortgage?

A commercial hire purchase lets your business hire a vehicle from the lender while making regular repayments until you've paid it off. Ownership transfers to you once the final payment is made. A chattel mortgage, on the other hand, gives you immediate ownership of the vehicle, with the lender taking out a mortgage over it as security until the loan is repaid.

Can I claim GST on a commercial hire purchase?

Yes, if your business is registered for GST, you can generally claim the GST paid on the purchase price of the vehicle upfront in your next Business Activity Statement (BAS).

Do I need a deposit for a commercial hire purchase?

In most cases, a deposit isn't required, but lenders may ask for one depending on your credit profile or the value of the vehicle. A deposit can help lower your ongoing repayments and interest costs.

Can I get a commercial hire purchase if I'm self-employed?

Yes. Many financiers offer commercial hire purchase agreements to self-employed individuals, sole traders and small business owners. You'll usually need to show your ABN, business financials and proof of income.

Is the balloon payment tax-deductible?

The balloon payment itself isn't deductible, but the interest portions of your repayments and the depreciation on the vehicle may be. You should confirm your specific tax deductions with an accountant or tax adviser.

What happens if I want to pay out my hire purchase early?

You can usually pay out a commercial hire purchase before the end of the term. The lender will provide a payout figure that includes the remaining balance and any applicable early termination fees. Doing so can help you save on interest.

Can I finance used vehicles with a commercial hire purchase?

Yes, many lenders accept used vehicles provided they meet age and condition requirements. Each lender sets its own restrictions, so check these before applying.

Are interest rates fixed or variable on a commercial hire purchase?

Most commercial hire purchase agreements offer fixed interest rates, giving you predictable repayments over the term. However, some lenders may offer variable options, depending on your agreement.

Can a commercial hire purchase affect my business credit score?

Yes. Making regular, on-time repayments can help build a positive credit history for your business, while missed payments could negatively impact your business credit score.

What happens at the end of the hire purchase term?

Once you've made all repayments, including any balloon or residual payment, legal ownership of the vehicle transfers to your business. You're then free to keep, sell, or trade in the vehicle.

How to use the commercial hire purchase calculator

Use the calculator to test multiple scenarios before applying - small changes to the residual or repayment frequency can make a big difference to total costs.
Adjust the loan term, residual value and repayment frequency in the calculator to find a repayment plan that best fits your business cash flow.
Remember the calculator provides estimates only. And your own interest rate may depend on other factors like your credit score.

A commercial hire purchase (CHP) is a commercial finance product that enables a business to buy a car after an agreed lease period.

How to use the commercial hire calculator

Using the calculator is simple. Enter your information into the relevant fields and it will calculate your repayments on your car finance.

Loan amount. This is the overall cost of the hire purchase loan.
Loan term. The loan term is how long you agree to lease the car for before it can be purchased. It's generally between 1 and 5 years for fixed repayments or 1 and 7 years for variable.
Residual (balloon) amount. This is an additional payment that is made at the end of the hire period to buy the car outright.
Interest rate. The rate of interest that you pay for the commercial hire purchase. This may be fixed or variable.

*Whilst every effort has been made to ensure the accuracy of this calculator, the results should only be used as an indication. They are neither a recommendation nor an eligibility test for any product and should not be construed as financial advice, investment advice or any other sort of advice.

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Finder Score 8.2 Great ScotPac Boost Business Loan	Finder Score 8.2 Great	$10,000	$500,000	6 months to 3 years	$0 application fee	A business loan for any industry. Borrow between $10,000 and $500,000, with approved loans funded within 24 hours. Minimum monthly turnover of $10,000 and 1 year of trading history required.	Go to site View details Compare product selectionCompare	loading
Finder Score 9.5 Excellent Valiant Finance Business Terms Loans	Finder Score 9.5 Excellent	$5,000	$500,000	3 months to 5 years	$0 application fee	A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 80 lenders. Loans between $5,000 and $20 million are available. Request a call – your loan can be funded in 1 business day.	Enquire now View details Compare product selectionCompare	loading
Finder Score 5.5 Standard ebroker Business Loan	Finder Score 5.5 Standard	$5,000	$5,000,000	1 month to 30 years	$0 application fee	Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.	Enquire now View details Compare product selectionCompare	loading
Finder Score Scotpac Line of Credit	Finder Score		$500,000	Up to 2 years	Establishment fee of 3% of the facility limit	Go to site View details Compare product selectionCompare	loading
Finder Score 7.9 Great Prospa Small Business Loan	Finder Score 7.9 Great	$5,000	$500,000	3 months to 3 years	3.5% origination fee	Small business loans are available from $5,000 - $500,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $5,000 is necessary.	Go to site View details Compare product selectionCompare	loading
Finder Score 8.4 Great Prospa Unsecured Business Loan	Finder Score 8.4 Great	$5,000	$150,000	3 months to 5 years	3% origination fee	An unsecured business loan available up to $150,000 that can be funded in 1 business day. You must provide 6 months of trading history, 3 months history of existing business purchases and have a turnover of $6,000+ per month.	Go to site View details Compare product selectionCompare	loading
Finder Score 8.5 Great Prospa Secured Business Loan	Finder Score 8.5 Great	$150,000	$500,000	3 months to 5 years	3% origination fee	A secured business loan available up to $500,000 that can be funded in 1 business day. Your business must have a turnover of at least $6,000 per month and you must provide 6 months of trading history and 3 months history for existing business purchases.	Go to site View details Compare product selectionCompare	loading
Finder Score 7.9 Great ScotPac Invoice Finance	Finder Score 7.9 Great	$200,000	$200,000,000	1 to 2 years	Establishment fee 1% of the limit	Improve your business cash flow by financing your outstanding invoices. No minimum trading history required, but minimum 12 - month term and $200,000 in invoices.	Go to site View details Compare product selectionCompare	loading

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Example: John's delivery service

John is looking to purchase a new vehicle for his delivery service business. His cash flow won't allow for him to buy a new vehicle, so he wants to know how much his repayments will be with a commercial hire purchase. Using the CHP calculator, he enters the following amounts:

Loan amount: $10,000
Loan term: 3 years
Residual: 15% ($1,500)
Interest rate: 8% p.a.

He can see that his monthly repayments will be $274.53. Wanting to save some money, he sees what would happen if he made weekly repayments. Using the calculator, he can see that his weekly repayments would be $63.35, which would be approximately $20 less a month than if he made monthly repayments.

* This is a fictional, but realistic, example.

Have more questions about using the commercial hire purchase calculator?

How can I use the calculator to reduce my repayments?

As outlined in the example above, you can change the information you enter into the calculator and see if your repayments are reduced. By simply changing from monthly to weekly repayments, John was able to reduce the amount he paid each month. You can also increase your residual payment, but keep in mind that this will still need to be paid at the end of the loan term.

How can I reduce the amount of interest I repay on my loan?

Reducing interest and reducing repayments are 2 entirely different things, though you can reduce the interest payable by lowering your principal. You can reduce your interest by lowering your loan term, increasing the frequency of your repayments or by budgeting to make additional repayments.

How accurate is the calculator?

The calculator is an approximation, but it is accurate as long as the information you put into it is correct. Keep in mind the calculator doesn't take into account the fees or other costs that may come with your commercial hire purchase.

Do I need to supply any personal information to use the commercial hire purchase calculator?

No personal information is needed to use the CHP calculator. You only need the loan amount, loan term, interest rate, repayment frequency and residual amount and percentage (if applicable).

Does the commercial hire purchase calculator guarantee my loan repayments?

No, the CHP calculator will only provide you with a repayment amount based on the loan information you provide. It is up to the individual lender to decide what your actual loan and repayments will be.

Need more help?

Frequently asked questions

A commercial hire purchase lets your business hire a vehicle from the lender while making regular repayments until you've paid it off. Ownership transfers to you once the final payment is made. A chattel mortgage, on the other hand, gives you immediate ownership of the vehicle, with the lender taking out a mortgage over it as security until the loan is repaid.

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Commercial hire purchase calculator

Use our commercial hire purchase calculator to see how much your business can save.

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