Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
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The short version
Hire purchase in five lines.
→The business gets the asset, the financier keeps title. Use passes at settlement and legal ownership passes on the final payment. The split is the whole mechanism.
→It amortises fully. Every dollar financed is repaid across the term, which is why the payment is higher than a lease on the same asset and why nothing falls due at the end.
→The tax position is the familiar one. The business is ordinarily treated as the owner, so the depreciation claim sits with it and the GST is generally claimable up front, both subject to the accountant’s confirmation.
→The business carries the resale risk. If the asset is worth less than expected at the end, that is the business’s problem, and if it is worth more, that is the business’s gain.
→Indicative only. Every band on this page is illustrative. Actual rates, fees and terms come from the lender after assessment of the business and the specific asset.
What it is
Buying by instalments, with title held back as security.
Under a hire purchase the financier buys the asset and agrees to sell it to the business by instalments. The business takes delivery and uses it from the first day, the financier holds legal title as its security, and title passes automatically when the last payment is made. In New Zealand the financier normally also registers a security interest on the Personal Property Securities Register, so the position is protected against third parties as well as against the borrower.
That arrangement is why the structure is priced the way it is. The lender is not relying on a promise; it holds the thing itself and can recover it if the payments stop. For a business, the practical effect is a rate materially below unsecured business lending, and a facility that is generally easier to obtain because the security question is answerable from the asset rather than only from the accounts.
The whole amount financed is amortised across the term. That is the single most important number on this page, because it is what separates a hire purchase from a lease. There is no residual sitting at the end, no lump sum to plan for and no decision to make when the term runs out. The business simply owns the asset and stops paying.
Indicative rate band
8% to 16% p.a.
Deposit commonly sought
0% to 20%
Registered on
PPSR
Falls due at the end
Nothing
The two halves
What the business gets, and what the financier keeps.
The business
Possession, use and the economic position of an owner.
From settlement the business has the asset, can use it however the agreement permits, and carries the running costs, the insurance obligation and the maintenance. It also carries the economic consequences of ownership, which means it benefits if the asset holds value and loses if it does not.
For accounting and tax purposes the business is ordinarily treated as the owner from day one even though legal title has not passed, which is why the asset sits on its balance sheet and the depreciation claim sits with it. That treatment depends on the specific arrangement and is subject to the accountant’s confirmation.
The financier
Legal title, held purely as security.
The financier holds title but has none of the practical incidents of ownership. It does not use the asset, does not maintain it and does not benefit from its appreciation. Title is being held for one reason, which is to make recovery straightforward if the payments stop.
That is also why the financier registers on the PPSR despite holding title. Registration protects the position against a third party who might otherwise acquire an interest in the asset, and it is the reason a search of that register precedes any purchase of a used asset in New Zealand.
Tax and GST
The familiar position, and why it is the familiar one.
Under a hire purchase a GST-registered business is generally able to claim the GST on the full purchase price in the return covering the period the agreement begins rather than spreading it across the payments, subject to the accountant’s confirmation of the accounting basis used. The depreciation claim ordinarily sits with the business at the rate Inland Revenue publishes for the applicable asset category, and the interest component of the payments is ordinarily deductible while the principal component is not, again subject to the accountant’s confirmation. That combination, an up-front GST claim plus depreciation plus interest deductibility and all of it subject to the accountant’s confirmation, is the position New Zealand accountants and lenders commonly default to, and it is a large part of why this structure is the market standard.
Indicative figures
What a hire purchase costs at common amounts.
Produced by the calculator on this page over a 48-month term at the indicative rates shown, rounded. Illustrative only, and not an offer of credit.
Amount financed
9% p.a.
11% p.a.
14% p.a.
Total interest at 11%
$20,000
~$115 / week
~$119 / week
~$126 / week
~$4,800
$40,000
~$229 / week
~$238 / week
~$252 / week
~$9,700
$80,000
~$459 / week
~$477 / week
~$504 / week
~$19,300
$150,000
~$860 / week
~$894 / week
~$945 / week
~$36,200
$300,000
~$1,720 / week
~$1,787 / week
~$1,889 / week
~$72,400
Indicative hire purchase figures over 48 months. Illustrative, not an offer of credit.
Against the alternatives
How it differs from the three structures nearest it.
The asset does not change. What changes is ownership, what the payment reflects, and what is waiting at the end.
Feature
Hire purchase
Chattel mortgage
Finance lease
Operating lease
Who holds title in the term
The financier
The business
The financier
The financier
What the payment amortises
The full amount
The full amount
Amount less residual
A rental
Depreciation ordinarily claimed by
The business
The business
Depends on the arrangement
The financier
Due at the end
Nothing
Nothing
The residual
Return the asset
Resale risk sits with
The business
The business
At the residual
The financier
Fits when
The asset will be kept
The asset will be kept
Replacement runs on a cycle
The asset will not be kept
Tax treatment in every column is subject to the accountant’s confirmation, because it depends on the specific arrangement and the accounting basis the business uses.
The process
What a hire purchase application typically involves.
Written as an observation of what commonly happens rather than as instructions. Every lender differs, and none of this is a guarantee of an outcome.
01
Same day once a quote exists
The asset is identified
Asset finance is written against specific goods, so a quote or invoice naming the make, model, year, serial or VIN number and price is normally what opens the file. Pre-approval without an identified asset exists with some lenders and is commonly re-priced once the actual item is known.
Documents commonly required
·Supplier quote or invoice
·Serial or VIN number
·Condition and hours or kilometres on used assets
02
1 to 5 working days
The business is assessed
Trading history carries more weight than the asset. Twelve months of bank statements is the common request, with financial statements added above larger amounts and a schedule of existing finance where the business already carries facilities.
Documents commonly required
·12 months of bank statements
·NZBN and GST details
·Financial statements above larger amounts
·Schedule of existing finance
03
Same day
The security position is checked
A PPSR search runs on any used asset, and on a private sale it is the step that matters most, because a registered interest attaches to the goods rather than to the seller. Where an existing interest is found, the usual path is for it to be settled from the purchase price at transfer.
Documents commonly required
·PPSR search result
·Evidence of the seller’s title on private sales
04
1 to 3 working days after acceptance
Documents are issued and settlement occurs
The financier commonly pays the supplier directly rather than paying the business, registers its own security interest, and requires the asset insured with its interest noted. The first payment usually falls a month after settlement.
Documents commonly required
·Signed hire purchase agreement
·Insurance certificate naming the financier
Insurance is a condition rather than an option, and settlement is frequently held until the certificate arrives. Letting cover lapse during the term is typically a breach of the agreement.
Worked scenarios
Three New Zealand hire purchases, illustratively.
Illustrative scenarios on stated assumptions. The figures are indicative and are produced by the calculator on this page rather than quoted by any lender.
Eight years trading, asset kept for a decade
The straightforward case
A business finances $80,000 of plant it intends to run for ten years. On these assumptions a 48-month hire purchase at an indicative 11% carries a payment near $477 a week.
At the end of four years the payments stop, the business owns the asset, and it has six years of use with no finance cost at all. That tail is the whole argument for this structure and it does not appear in any comparison of weekly figures.
Indicative figures
Amount financed
$80,000
Term
48 months
Indicative weekly
~$477
After the term
Owned, no cost
Two years trading, $20,000 trade-in available
Where a deposit changes the position
The same $80,000 asset with a $20,000 trade-in applied leaves $60,000 financed. The payment falls proportionally, to roughly $358 a week on the same assumptions.
The deposit does something the payment reduction does not show. It lowers the lender’s exposure, which commonly improves the indicative rate offered, and it closes the gap between what is owed and what the asset is worth much earlier in the term. In this scenario that matters because the business is two years old and would otherwise have been asked for one anyway.
Indicative figures
Asset price
$80,000
Trade-in applied
$20,000
Amount financed
$60,000
Indicative weekly
~$358
Technology replaced every three years
Where it is the wrong structure
A business finances $80,000 of hardware on a five-year hire purchase because the weekly figure looked comfortable, and replaces the hardware after three years as it always does.
It now owns obsolete equipment it cannot easily sell, still owes two years of payments on it, and is financing the replacement alongside. Nothing went wrong with the agreement; the structure simply did not match the intention. A shorter term, or a lease that took the hardware back, would both have avoided it.
Indicative figures
Term taken
60 months
Actual replacement
36 months
Result
Two facilities at once
Avoidable by
Matching term to intention
If it goes wrong
What happens when payments stop.
A hire purchase is secured, and the consequence of default differs from an unsecured loan. Set out here as fact rather than as a warning, because it is part of what the structure is.
The financier recovers the asset
It holds title and has registered a security interest, so it has a defined route to take possession under the Personal Property Securities Act 1999. That certainty is exactly why the pricing sits below unsecured lending in the first place.
What happens:The business loses the use of the asset.
A shortfall commonly remains
The asset is sold and the proceeds applied to the debt. Where the sale raises less than the balance owing, the difference commonly remains payable by the business and by any guarantor. Because asset values fall faster than an amortising balance early in a term, that gap is widest in the first half.
What happens:A residual debt can survive the loss of the asset.
A guarantee reaches beyond the company
Where a director has guaranteed the facility, which is common on smaller New Zealand agreements, the guarantee is a separate obligation surviving the company’s position. The Credit Contracts and Consumer Finance Act can also apply where a sole trader’s borrowing is wholly or predominantly for personal use.
What happens:Recovery can extend to the guarantor personally.
Where trading conditions change, lenders are commonly willing to discuss restructuring before arrears build, and a conversation held early has more options available to it than one held late.
Honest assessment
Where hire purchase fits, and where it does not.
Where it fits
·The asset will be kept well past the end of the term
·The business wants the depreciation claim and the up-front GST position
·Nothing deferred to the end is wanted, and a clean ending matters
·The asset holds value, so the equity position turns positive early
·The full amortising payment is comfortable in a quiet month as well as a good one
Where it does not
·The asset will be replaced on a cycle shorter than the term
·The weekly figure is the binding constraint and a residual would make it work
·The asset dates quickly, where owning obsolete equipment is a liability rather than a gain
·The business does not want the asset on its balance sheet
·The asset is already owned, where a secured asset loan or a sale and leaseback is the relevant structure
The market
Who writes hire purchase in New Zealand.
Editorial only. These are the kinds of lender active in this structure, listed to describe the market rather than to recommend any of them. We hold no relationship with the lenders named here.
Best for established borrowers
Bank asset finance divisions
The major New Zealand banks all write hire purchase, typically at the sharpest indicative pricing and the slowest pace. Most useful where financial statements are available and the business already banks with them.
Best for asset-led decisions
Specialist asset financiers
Non-bank financiers whose credit teams assess the asset as closely as the borrower, commonly more flexible on older or unusual assets than a bank, at an indicative rate above bank pricing.
Best for new asset purchases
Vendor and dealer programmes
Suppliers frequently have finance attached to new stock, sometimes subsidised on particular items. Convenient, and worth comparing against an independent quote rather than accepted on convenience.
Best for small amounts
General business lenders
Below the minimum a specialist asset financier will write, funding commonly moves to an unsecured business facility. Faster and simpler, and priced as unsecured lending rather than as asset finance.
Names are deliberately generic. A comparison of specific lenders would need current pricing we cannot substantiate, and publishing it would be a claim rather than information.
Test the maths
A hire purchase, in weekly numbers.
Pre-filled with a mainstream asset over four years. Nothing is deferred, so this figure is the whole weekly commitment. Indicative only, and not a quote or offer of credit.
Backs the note that the CCCFA can reach a sole trader borrowing wholly or predominantly for personal use.
FAQ
Hire purchase in New Zealand, questions answered
What is a hire purchase?
An agreement to buy an asset by instalments, where the financier holds legal title until the final payment and the business has possession and use from settlement. Title passes automatically when the last payment is made. It is the most common asset finance structure in the New Zealand market.
Who owns the asset during the term?
The financier holds legal title, purely as security. The business has possession, use and the economic position of an owner, and for tax purposes is ordinarily treated as the owner from day one even though title has not passed, subject to the accountant’s confirmation on the specific arrangement.
Why is the payment higher than on a lease?
Because the full amount financed is being repaid across the term. A lease sets a residual at inception that is not amortised, so less is repaid and the payment is lower. The lower lease payment is buying a deferral rather than a cheaper facility, and the deferred amount falls due at the end.
When is the GST claimable?
A GST-registered business is generally able to claim the GST on the full purchase price in the return covering the period the agreement begins rather than spreading it across the payments, subject to the accountant’s confirmation of the accounting basis used. That up-front position is one of the main practical attractions of the structure.
Who claims depreciation on a hire purchase?
Ordinarily the business, because it is treated as the owner for tax purposes, at the rate Inland Revenue publishes for the applicable asset category. The interest component of the payments is ordinarily deductible while the principal is not, subject to the accountant’s confirmation, since the principal is acquiring an asset being depreciated separately.
Is a deposit required?
Not always. Nil-deposit agreements are commonly available on newer assets for businesses with a reasonable trading history. Deposits are more often sought on older assets, specialised ones, and businesses trading under two years. A trade-in commonly serves as the deposit, and it improves the indicative rate as well as the payment.
What happens at the end of the term?
Nothing falls due. The final payment transfers title and the business owns the asset outright. That is the defining feature of the structure and the reason it suits assets a business intends to keep, because the payments end while the asset keeps working.
Can a hire purchase be settled early?
Usually, and the terms vary. Some agreements allow early settlement without cost, others carry a settlement fee, and some fixed-rate agreements carry a break cost reflecting interest the lender expected to receive. The agreement is the authoritative reference, and it is worth asking before signing rather than at the point of wanting to settle.
What happens if the asset is sold mid-term?
The facility is normally settled from the proceeds. Where the sale raises less than the balance owing the shortfall remains payable, and because asset values fall faster than an amortising balance early on, that gap is widest in the first half of a term. A payout figure from the financier is what makes the position visible.
Does a hire purchase appear on the balance sheet?
The asset ordinarily does, from day one, with the outstanding finance shown as a liability against it. That is a consequence of the business being treated as the owner in substance despite not holding legal title, and how it is presented depends on the reporting framework the business uses. The accountant is the right person to confirm it.
Is a personal guarantee normal?
It is common on smaller facilities and on newer businesses, and it is a separate obligation surviving the company’s position. It is more often sought where the asset is specialised or the trading history short, because both weaken what the security alone is worth.
Can a used asset be bought on hire purchase?
Yes, and a large share of New Zealand hire purchase is written against used assets. Terms shorten as the asset ages, because the term a lender will run is set against the asset’s residual value at the end rather than its value today. A PPSR search is standard on any used purchase.
Indicative content only. Not personalised financial advice.
Financing a machine is a commitment that runs for years, and the repayments come out of the same operating cash flow as everything else. Modelling the weekly and monthly cost against the working-capital position before committing is what this site is built for. Borrowing at a level that stays comfortable through a quiet quarter, rather than only through a strong one, is widely regarded as the safer frame.
What this site is
A calculator and information tool. Not a lender, not a broker, not a registered financial adviser. Nothing here is personalised financial advice.
What the figures show
Modelled estimates based on the inputs shown. Not a quote. Not an offer of credit. Not a guarantee of approval, rate or fees.
What the lender decides
Final rates, fees, and approval are set by the lender after a CCCFA-appropriate assessment of the applicant's circumstances and credit decision.
Commercial disclosure
Assetfinance.org.nz earns a commission from Prospa when a visitor applies through this site and their application is approved. The commission is paid by Prospa, not by the borrower, and it does not influence the rate Prospa offers. Full disclosure on the partner page.
Tax, GST, and accountant framing
Tax-treatment statements (GST claim timing, interest deductibility, depreciation rates) are general in nature and subject to the accountant's confirmation on the specific business position. For material amounts, professional advice from a registered financial adviser or chartered accountant is widely regarded as the safer frame.
