Compare finance types
Operating lease vs Sale and leaseback: which is right for your business?
The main difference between a operating lease and a sale and leaseback is how they are secured and repaid: a operating lease suits businesses replacing equipment on a fixed cycle who want no residual or resale exposure, while a sale and leaseback suits asset-rich businesses needing working capital for growth, a contract or a tax liability.
Operating lease vs Sale and leaseback at a glance
| Operating lease | Sale and leaseback | |
|---|---|---|
| What it is | An operating lease is a rental agreement where the financier owns the asset, carries the residual value risk and leases it to your business for a fixed monthly payment over an agreed term. At the end you simply hand the asset back, with no residual to pay and no resale to manage. | 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 | 12–60 months | 12–60 months |
| Indicative rate | 7.5% – 15% p.a. | 8.5% – 18% p.a. |
| Rate type | Fixed | Fixed |
| Security | Secured by the asset | Secured by the asset |
| Repayments | Monthly rental | Monthly |
| Typical speed | 2–5 business days | 3–10 business days including valuation |
| Best for | Businesses replacing equipment on a fixed cycle who want no residual or resale exposure | Asset-rich businesses needing working capital for growth, a contract or a tax liability |
| Consider the other if | Long-life assets you intend to keep and own outright | Older, low-value or specialised equipment with a thin resale market |
| Tax | Rentals on business-use assets are generally deductible as an operating expense and GST is charged on each payment. Confirm with your accountant. | 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 operating lease
A operating lease is usually the better fit for businesses replacing equipment on a fixed cycle who want no residual or resale exposure. Its main advantages are no residual to pay and no resale risk at term end, fixed, predictable monthly cost, simple upgrade path onto newer equipment. Consider the alternative if long-life assets you intend to keep and own outright.
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.
Operating lease
An operating lease is a rental agreement where the financier owns the asset, carries the residual value risk and leases it to your business for a fixed monthly payment over an agreed term. At the end you simply hand the asset back, with no residual to pay and no resale to manage.
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.