Commercial hire purchase (CHP) is an agreement between the purchaser and the financier whereby the financier owns the vehicle or equipment during the hiring period. It differs from a finance lease in that the goods automatically become yours once all terms of the agreement have been completed – usually when the final instalment is paid. As such it is finance taken out by a business when they wish to purchase the goods.
A commercial hire purchase can be arranged with or without a final balloon payment at the end of the term depending on what your budgetary requirements are. The repayments are fixed for the term of the commercial hire purchase. An upfront deposit or trade-in, which will reduce your rental commitments, is optional. It is accounted for on the balance sheet.