Use the asset, keep options open
Finance leases for equipment you use but do not need to own.
Fixed lease payments, off-balance-sheet-style simplicity and a clear decision at the end of term.
What is a finance lease?
A finance lease is equipment finance where the lender owns the asset and leases it to your business for a fixed term, with a residual value at the end that you can pay out, refinance or return against. Lease payments are usually fully deductible.
Finance leases suit assets that are replaced on a cycle, such as vehicles, IT hardware, fit-outs and medical or hospitality equipment. The lender buys the asset, you pay to use it, and at term end you choose what happens next.
The trade-off against a chattel mortgage is ownership and GST treatment: GST is paid on each lease payment rather than claimed upfront, and the residual is a real obligation. Your broker walks through both structures side by side.
Finance lease at a glance
| Amount | $10,000 – $1,000,000 |
|---|---|
| Term | 12–60 months |
| Rate type | Fixed |
| Indicative rates (Q3 2026) | 7.2% – 14.9% p.a. · see rate history |
| Security | Secured by the asset |
| Repayments | Monthly |
| Typical speed | 1–3 business days |
| Best for | Businesses that refresh equipment regularly or prefer rental-style deductions |
| Consider something else if | Assets you want to own outright and claim GST on upfront |
| Tax | Lease payments are generally deductible as an operating expense. GST is charged on each payment. |
Advantages
- Payments usually fully deductible
- Flexible end-of-term options
- Preserves cash and credit lines
Trade-offs
- You do not own the asset during the term
- Residual value risk sits with you
- GST not claimable upfront
How to apply for a finance lease
- 01
Choose the asset
Supplier quote, expected life and replacement cycle.
- 02
Set term and residual
Matched to how long you will use the asset.
- 03
Lease and decide at term end
Pay out, refinance, upgrade or return.
Documents lenders commonly ask for
- ID and ABN
- Supplier quote
- Financials for larger amounts
Estimate your repayments
- Number of repayments
- 48
- Total interest (est.)
- $14,928
- Total repaid (est.)
- $89,928
This calculator provides an estimate only and does not account for fees, charges or the specific terms a lender may offer. It is not financial advice or an offer of finance.
Key terms
What is a finance lease?
A finance lease is a rental agreement for business equipment where the financier retains ownership for the term. The lessee makes fixed payments and is responsible for the residual value at the end.
Finance lease FAQs
What documents will you need?
We start with a conversation about your business. To assess your options, lenders commonly need identification and recent business bank statements. Depending on the loan, they may also request BAS, financials or statements for existing debts. Your broker gives you a clear list for your situation.
How large a balloon can I set?
Lenders publish maximum residual or balloon percentages that fall as the term lengthens, because the asset is worth less at the end of a longer term. For a vehicle, a common pattern is up to roughly 50% on a two-year term, reducing to around 20% to 30% on a five-year term. The ATO also sets minimum residual values for finance leases. A larger balloon lowers monthly repayments but increases total interest and leaves a lump sum to deal with at the end.
What happens at the end of a finance lease?
You generally have three practical choices: pay the residual and take ownership, refinance the residual over a further term, or return or sell the asset and settle the residual from the proceeds. Under a finance lease the financier owns the asset during the term, so the documentation sets out exactly what the options are. Check the agreement early rather than in the final month, and speak to your accountant about the tax effect of each choice.