Compare finance types
Finance lease vs Sale and leaseback: which is right for your business?
The main difference between a finance lease and a sale and leaseback is how they are secured and repaid: a finance lease suits businesses that refresh equipment regularly or prefer rental-style deductions, while a sale and leaseback suits asset-rich businesses needing working capital for growth, a contract or a tax liability.
Finance lease vs Sale and leaseback at a glance
| Finance lease | Sale and leaseback | |
|---|---|---|
| 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. | Sale and leaseback is an arrangement where you sell equipment your business already owns to a financier for its market value and immediately lease or finance it back, releasing cash while keeping the asset in daily use. It converts equity locked in plant into working capital. |
| Amount | $10,000 – $1,000,000 | $20,000 – $2,000,000 |
| Term | 12–60 months | 12–60 months |
| Indicative rate | 7.2% – 14.9% p.a. | 8.5% – 18% p.a. |
| Rate type | Fixed | Fixed |
| Security | Secured by the asset | Secured by the asset |
| Repayments | Monthly | Monthly |
| Typical speed | 1–3 business days | 3–10 business days including valuation |
| Best for | Businesses that refresh equipment regularly or prefer rental-style deductions | Asset-rich businesses needing working capital for growth, a contract or a tax liability |
| Consider the other if | Assets you want to own outright and claim GST on upfront | Older, low-value or specialised equipment with a thin resale market |
| Tax | Lease payments are generally deductible as an operating expense. GST is charged on each payment. | A sale may trigger a balancing adjustment against the asset’s written-down value. Get accounting advice before proceeding. |
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 sale and leaseback
A sale and leaseback is usually the better fit for asset-rich businesses needing working capital for growth, a contract or a tax liability. Its main advantages are releases capital without losing the use of the asset, priced as secured finance, not unsecured lending, no property security required. Consider the alternative if older, low-value or specialised equipment with a thin resale market.
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.
Sale and leaseback
Sale and leaseback is an arrangement where you sell equipment your business already owns to a financier for its market value and immediately lease or finance it back, releasing cash while keeping the asset in daily use. It converts equity locked in plant into working capital.