Commercial Hire Purchase

Flexible Financing, Tax Advantages

Commercial Hire Purchase (CHP) is a finance solution where the client gains ownership of the asset at the end of the term. It allows tax-paying entities to claim depreciation and interest as deductions, making it a cost-effective option for hardware-only acquisitions.

CHP is recorded as an on-balance-sheet transaction, offering transparency in asset management. However, it is not suitable for software license financing, as legal title to software cannot be transferred to the lender under standard hire purchase terms.

Benefits & Limitations

Tax-deductible interest and depreciation

Claim interest and depreciation to reduce taxable income and increase savings.

Client gains ownership at term end

Ownership of financed equipment transfers to client after final payment.

Not ideal for upgrades or enhancements

Limited flexibility makes it unsuitable for frequent upgrades or tech enhancements.

Not applicable to software licensing

Cannot be used to legally finance software licenses or services.