Compare finance types
Equipment loan vs Finance lease: which is right for your business?
The main difference between a equipment loan and a finance lease is how they are secured and repaid: a equipment loan suits any business buying income-producing equipment, while a finance lease suits businesses that refresh equipment regularly or prefer rental-style deductions.
Equipment loan vs Finance lease at a glance
| Equipment loan | Finance lease | |
|---|---|---|
| What it is | An equipment loan is a secured business loan used to buy machinery, vehicles or technology, with the equipment itself as security and fixed repayments over 1 to 7 years. It covers new and used assets from dealers or private sellers. | 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. |
| Amount | $5,000 – $5,000,000 | $10,000 – $1,000,000 |
| Term | 12–84 months | 12–60 months |
| Indicative rate | 6.9% – 16% p.a. | 7.2% – 14.9% p.a. |
| Rate type | Fixed | Fixed |
| Security | Secured by the asset | Secured by the asset |
| Repayments | Monthly | Monthly |
| Typical speed | Same day to 48 hours for low-doc | 1–3 business days |
| Best for | Any business buying income-producing equipment | Businesses that refresh equipment regularly or prefer rental-style deductions |
| Consider the other if | General working capital with no asset purchase | Assets you want to own outright and claim GST on upfront |
| Tax | Interest and depreciation are generally deductible. | Lease payments are generally deductible as an operating expense. GST is charged on each payment. |
Rates shown are indicative ranges observed across our lender panel for the period stated. They are not an offer or quote. Your rate depends on your business, the lender, the amount, the term and the security offered. The lender makes the final credit decision.
When to choose a equipment loan
A equipment loan is usually the better fit for any business buying income-producing equipment. Its main advantages are secured pricing, low-doc pathways for established businesses, new, used and private-sale assets. Consider the alternative if general working capital with no asset purchase.
When to choose a finance lease
A finance lease is usually the better fit for businesses that refresh equipment regularly or prefer rental-style deductions. Its main advantages are payments usually fully deductible, flexible end-of-term options, preserves cash and credit lines. Consider the alternative if assets you want to own outright and claim gst on upfront.
Equipment loan
An equipment loan is a secured business loan used to buy machinery, vehicles or technology, with the equipment itself as security and fixed repayments over 1 to 7 years. It covers new and used assets from dealers or private sellers.
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.