Hire purchase

The financier owns the asset during the agreement; ownership transfers once the final payment is made.

How it generally works

Under a hire purchase agreement, the financier buys the equipment and hires it to the business for an agreed term and set of payments. The business uses the equipment as if it owns it, but legal ownership doesn't transfer until the agreement is completed — typically through a final payment at the end of the term.

This is one of the more familiar structures for vehicle and equipment finance in Australia, partly because the repayment structure tends to be straightforward and predictable across the term.

Worth knowing: The exact accounting and tax treatment of a hire purchase agreement depends on the specific terms of the agreement and the business's circumstances — confirm with an accountant rather than relying on a general description.

What tends to suit this structure

Businesses that want predictable, fixed repayments over a set term — and who are comfortable with ownership transferring at the end rather than the start — often find this structure straightforward to plan around.

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