Compare finance types
Finance lease vs Hire purchase: which is right for your business?
The main difference between a finance lease and a hire purchase is how they are secured and repaid: a finance lease suits businesses that refresh equipment regularly or prefer rental-style deductions, while a hire purchase suits businesses wanting eventual ownership where a lender or accountant specifically prefers this structure.
Finance lease vs Hire purchase at a glance
| Finance lease | Hire purchase | |
|---|---|---|
| What it is | 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. | Hire purchase is an asset finance structure where the financier buys the asset and hires it to your business for a fixed term, with ownership transferring automatically once the final instalment — including any balloon — is paid. It sits between a lease and a chattel mortgage, and is used less often in Australia since GST reforms favoured the chattel mortgage. |
| Amount | $10,000 – $1,000,000 | $10,000 – $2,000,000 |
| Term | 12–60 months | 12–84 months |
| Indicative rate | 7.2% – 14.9% p.a. | 7% – 14.9% p.a. |
| Rate type | Fixed | Fixed |
| Security | Secured by the asset | Secured by the asset |
| Repayments | Monthly | Monthly |
| Typical speed | 1–3 business days | 24–72 hours for low-doc, longer for full-doc |
| Best for | Businesses that refresh equipment regularly or prefer rental-style deductions | Businesses wanting eventual ownership where a lender or accountant specifically prefers this structure |
| Consider the other if | Assets you want to own outright and claim GST on upfront | Most GST-registered businesses, where a chattel mortgage usually delivers a better GST outcome |
| Tax | Lease payments are generally deductible as an operating expense. GST is charged on each payment. | Interest and depreciation are generally claimable, and GST treatment differs from a chattel mortgage. Confirm with your accountant before choosing. |
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 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.
When to choose a hire purchase
A hire purchase is usually the better fit for businesses wanting eventual ownership where a lender or accountant specifically prefers this structure. Its main advantages are ownership transfers automatically on the final payment, fixed instalments with an optional balloon, secured pricing, well below unsecured lending. Consider the alternative if most gst-registered businesses, where a chattel mortgage usually delivers a better gst outcome.
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.
Hire purchase
Hire purchase is an asset finance structure where the financier buys the asset and hires it to your business for a fixed term, with ownership transferring automatically once the final instalment — including any balloon — is paid. It sits between a lease and a chattel mortgage, and is used less often in Australia since GST reforms favoured the chattel mortgage.