Commercial Hire Purchase (CHP) can be a good way to finance your car. It is a contract that takes place between the buyer and the financer. The financer allows the buyer to have the right to use the car and in return the financer is paid regular monthly payments. When the end term nears a ‘balloon’ payment is an option and can be made usually at a rate less or on par with the value of the car when it was bought.

Until the final payment is made the financer retains the title deed to the car and then when all payments are clear the title is transferred to the buyer. The term does not need to end for you to make the payment in full. CHP is best suited for companies and small businesses or individuals using the car for their business as it does allow finance to be secured against the car purchase at a lower interest rate.

Benefits of a commercial hire purchase include a flexible contract that can be anything between 2 to 5 years and a final installment to be paid at the end of the contract rather than as a down payment when the car is bought. The interest rates remain fixed and any costs that will be incurred are known from the time the contract is signed. This car finance type is best for businesses as a tax deduction is available when the vehicle is used for business purposes and customers registered for a GST can claim the tax in the vehicle price. All in all the CHP is best used for business solutions.