A Commercial Hire Purchase (“CHP”) is a finance arrangement where the financier purchases an asset on the customer’s behalf and hires it back to them for a fixed monthly repayment for a specific term. This arrangement is also known as a Hire Purchase (“HP”) or a Corporate Hire Purchase.

Under a Commercial Hire Purchase, the financier purchases the chosen asset on the customer’s behalf and hires it back to them over a specified period of time. The customer retains full access and use of the asset for the term of the contract, but does not take ownership of the asset until the contract term is completed and any residual (final instalment due) has been paid.

A Chattel Mortgage is a finance arrangement where ownership of the asset is held by the customer from the time of purchase, although the financier ‘mortgages’ the asset as security against the loan.

Under a Chattel Mortgage, the financier provides funds for the customer to purchase and take ownership of the asset (chattel). The financier registers a “mortgage” over the asset as security against the loan. Once the contract term is complete and any balloon (final instalment) has been paid, the financier releases the charge.

A Finance Lease is a finance arrangement where the financier purchases the asset and leases it to the customer (lessee) for a fixed monthly rental over a specified lease term.

During the term of the lease agreement, the lessee pays the monthly rental to the financier and does not obtain ownership or equity in the vehicle. At the end of the lease, the lessee has the option of paying out the residual to take ownership, financing the residual, trading in the asset or returning the asset to the lessor.