Compare finance types
Hire purchase vs Sale and leaseback: which is right for your business?
The main difference between a hire purchase and a sale and leaseback is how they are secured and repaid: a hire purchase suits businesses wanting eventual ownership where a lender or accountant specifically prefers this structure, while a sale and leaseback suits asset-rich businesses needing working capital for growth, a contract or a tax liability.
Hire purchase vs Sale and leaseback at a glance
| Hire purchase | Sale and leaseback | |
|---|---|---|
| What it is | 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. | 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 – $2,000,000 | $20,000 – $2,000,000 |
| Term | 12–84 months | 12–60 months |
| Indicative rate | 7% – 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 | 24–72 hours for low-doc, longer for full-doc | 3–10 business days including valuation |
| Best for | Businesses wanting eventual ownership where a lender or accountant specifically prefers this structure | Asset-rich businesses needing working capital for growth, a contract or a tax liability |
| Consider the other if | Most GST-registered businesses, where a chattel mortgage usually delivers a better GST outcome | Older, low-value or specialised equipment with a thin resale market |
| Tax | Interest and depreciation are generally claimable, and GST treatment differs from a chattel mortgage. Confirm with your accountant before choosing. | 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 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.
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.
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.
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.