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Finance Lease

Written by

Shaun McGowan

The main benefit of a business finance lease is flexibility at the end of the lease term. In general, the cost of the asset will be spread across the lease repayments, and will include a residual amount determined by the lender at the start of the contract.

At the end of the lease, you’ll have the option to purchase the asset and assume full ownership. If the asset is worth more than the residual, the business will profit from the purchase.

In summary:

  • Generally offers ownership at the end of the lease
  • Doesn’t require a deposit or security — other than the asset financed
  • Your equipment does not sit on your books as an asset or liability
  • Immediate access to your business equipment once purchased
  • Repayments may be tax-deductible
  • Responsible for maintenance and running costs
  • Responsible for repairs and damage
  • Rental payments can be tailored over the term of the agreement
  • Fixed repayments over a set term
  • The residual value of the asset is calculated upfront

Key Features

  • Borrow from $5,000 to $500,000
  • Fixed or variable interest rates
  • Repayments to suit your budget
  • Terms from one month to five years
  • Secured & unsecured options
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Who is eligible?

  • Own a business and have an ABN
  • Business is GST-registered
  • Permanent Citizenship or Residency
  • Minimum business-operating time of six months
  • Can provide business bank statements
Minimum requirements for a business loan

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What is a Finance Lease for businesses?

A finance lease allows a borrower to have the use of an asset (business equipment) and the benefits of ownership, while the lender retains actual ownership of the asset until the end of the lease. As all risk is transferred to the borrower, a finance lease will often have lower interest rates than other types of equipment finance.

A finance lease is a type of business equipment finance in Australia. A finance lease is used for long-term high-value assets — e.g. medical equipment or heavy machinery — and provides greater owner benefits for a borrower than an operating lease.

How asset finance works
Business Finance Lease with Money Matchmaker

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Finance lease details


Asset Value


Lease Period


Ownership Benefits




Upgrade Options


Similar Finance

Business Loan

How to choose the right type of business Finance Lease

Both types of lease allow a business to access business equipment through regular finance repayments. The main difference between a finance lease and other types of lease is in ownership at the end of the lease term — a finance lease will allow a borrower to take ownership of the asset.

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Finance lease overview



Ownership of the property is transferred to the borrower at the end of the lease term.

Residual Payments

A balloon/residual option for the lessee to purchase the property or equipment at a specific price.

Running Costs & Admin

The borrower is responsible for all associated costs with owning and using the asset during the lease.

Accounting & Tax

The asset is listed on the business’s balance sheet. Lease payments are listed on profit and loss statements. Payments are generally tax-deductible.

The lender will purchase the asset on behalf of the customer, who then pays the lender a fixed monthly lease rental — plus interest — for the term of the lease. At the end of the lease, the asset is often purchased by the business at an agreed price, or returned to the lender.

The asset is listed on the business’s balance sheet, and lease repayments to the lender are generally tax-deductible. A finance lease uses fixed-rate payments, which ensures that repayments will stay the same regardless of changes to interest rates.

However, as the business takes full responsibility for the asset, it will also need to consider any additional costs such as repairs, maintenance, or servicing.

With a finance lease, you’ll pay close to the full value of the asset over the agreed term. Your lender will decide at the start of the contract how much they expect the asset to be worth by the end, and your final payment will be based on that anticipated value.

Need a new business vehicle or equipment for your business?

How to use a Finance Lease for your business

A finance lease is often used for high-value assets — such as medical equipment or business machinery — which the borrower intends to take ownership of at the end of the lease. The business will also benefit by claiming tax on its finance lease payments.

The business will have both the use of business equipment and the benefits of ownership, while the lender will have actual ownership of the asset. This means you’ll be responsible for any maintenance and repairs, but it also means there is low risk to the lender — which often results in lower rates.

Most businesses use a finance lease to purchase expensive assets while still maintaining operating cash flow and working capital. Residual payments are set at the start of a lease, which means a business can also profit if the asset’s value is higher than initially assessed.

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How to qualify and apply

You can apply for a finance lease the same you would for most equipment finance applications.

How to qualify for a loan in Australia

You can apply for an operating lease with:

  • Banks
  • Finance brokers
  • Non-bank lenders
  • Specialist asset finance lenders

The speed of approval for your application will depend on:

  • The type of asset or assets you wish to finance
  • The value of those assets
  • Your time in business

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Finance Lease rates

Finance lease interest rates will vary between lenders, however they will generally be lower than low-value-asset lease options and fit-out finance. This is due to the value of the assets available under this lease option, which includes high-value machinery and equipment which can serve as collateral on the loan amount.

Your personal and business financials will be taken into account when assessing your application, along with the type of asset you wish to finance and its age.

Finance Lease Interest Rates in Australia

Lowest average rateAverage rate for machinery

From 4.49%

From 5.00%

Important: These are example rates and do not represent the actual rate that you may qualify for.

Here are the most popular questions people are asking about a finance lease:

What is a finance lease and operating lease?

A finance lease and operating lease are both used to acquire business assets. Generally, a finance lease will allow full ownership over high-value assets at the end of the lease, while an operating lease is used for low-value assets such as laptops, where the borrower does not plan to own the asset at the end of the term.

What is a finance lease on a car?

A finance lease for a car is a form of business vehicle finance. While it may be a suitable option for some, there are generally loans and lease options available to businesses that provide superior benefits to a finance lease. The most popular example is a Chattel Mortgage.

How can I calculate the cost of a finance lease?

You can use an equipment finance calculator to quickly estimate the cost of various types of leases and loans for business equipment. Keep in mind that rates and terms will vary both between lenders, and borrower profiles.

What is a finance lease good for?

Generally, a finance lease is most suitable for high-value assets which a business plans to own at the end of the lease period. A finance lease is increasingly popular when considering medical practice fit-outs, as it allows professionals to finance valuable equipment and machinery without needing to pay for the asset upfront.

About the Author

Shaun McGowan from



Shaun McGowan

Shaun is the founder of and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded and Lend.


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