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COMMERCIAL HIRE PURCHASE (CHP)
A CHP is an asset loan facility whereby the financier agrees to purchase the Solar Panels on behalf of the customer, and then hire it back to them over a set period of time.
The customer has the use of the asset for the term of the contract but is not the owner of the solar panels.
The customer takes ownership of the asset at the end of the contract term when the total price of the asset and the interest charges have been paid in full.
A chattel mortgage is a commercial Solar Panel finance product aimed at businesses, companies and sole traders.
With a chattel mortgage the customer takes ownership of the Solar Panel at the time of purchase, although the finance company also takes out a “mortgage” over the installation to provide security for the loan.
Once the term of the loan is complete, the finance company removes the encumbrance, giving the customer clear title to the Asset.
With a finance lease, the financier purchases the Solar Panels required by the customer and then leases it to the customer.
The customer pays a rental to the financier to use the Solar Panel.
At the end of the agreed rental period the customer negotiates with the finance company to pay out a residual and own the Panels.
A lease is often referred to as off the books finance as the asset is not an asset nor a liability, therefore it sits outside of the balance sheet.