Comparing Types of Equipment Finance

When it comes to getting new equipment for your business, understanding your finance options doesn't need to be a daunting task. The first step is to understand what equipment is critical to your business, the effective life of that equipment and your ongoing business plans.


Rental Agreement
(Operating Lease)

Secured Loan Agreement
(Chattel Mortgage)


For rapidly depreciating equipment with up to 5 years life span (computing, machinery, IT, AV, security, gaming machines etc)

 For businesses where equipment ownership is critical (equipment with long performance life and low depreciation)


Ownership not main motivation. Equipment returned, rented or purchased for agreed amount at end of term Ownership granted at the beginning of the term. Contract is finalised upon receipt of all payments and final balloon


Highly flexible - easy upgrades and add-ons at any time with a simple contract variation. Often possible without any change to monthly payment Less flexible - can only upgrade by taking out a new contract and paying out the old one

Tax treatment

Monthly payments may be 100% tax deductible with business use Interest component of loan and depreciation of equipment may be tax deductible

Residual risk

 No residual risk obligation A final balloon payment is an option 

Accounting treatment

Rental payments may be treated as an operating expense and will not appear on the Balance Sheet as a financial liability Secured Loan Agreement commitments may be noted on the Balance Sheet as capital expenditure

GST treatment

 Rental payments include GST (Input Tax Credit may be claimable in your BAS)* GST inclusive cost of the equipment is financed. Loan payments do not attract GST*

End of term options

Various, including continue renting, offer to buy equipment, return equipment at no additional cost or upgrade and rent new equipment None - Business takes ownership of equipment

Responsibility  for equipment disposal

 Finance provider  Business

Bearing the risk of obsolescence

 Finance provider  Business


Contact our Relationship Managers on 1300 780 895 to discuss your equipment needs and the finance solution that best suits you.


* We do not provide financial advice.  You should obtain your own financial advice on the tax and accounting treatment of any finance solution you choose. Approval is subject to normal credit requirements.