Every operator who needs a truck, an excavator or a ute eventually hits the same fork in the road: do you buy or lease the gear? There is no single right answer. The better question is which structure suits how your business uses the asset, how you want to handle tax, and what you plan to do with the machine at the end. This guide breaks down both paths so you can pick with your eyes open.
The Real Question Behind Buy vs Lease
Buying and leasing are not opposites so much as two ends of a spectrum, and most equipment finance sits somewhere along it. At one end you own the asset outright and carry it on your books. At the other you simply pay to use it for a term and hand it back. The structures in between, like a chattel mortgage or a finance lease, mix ownership, tax treatment and flexibility in different ways. Getting the choice right comes down to four things: ownership, tax, the impact on your books, and what happens at the end of the term.
What Buying Looks Like
When operators say "buy", they usually mean financing the purchase so they own the asset from day one while spreading the cost. The two common structures are a chattel mortgage and commercial hire purchase.
With a chattel mortgage, you own the asset immediately and the lender registers a security interest over it until the loan is repaid. You can claim depreciation or the instant asset write-off, claim the GST credit on the purchase upfront if you are registered for GST, and deduct the interest on your repayments. A balloon at the end can lower the monthly figure. Commercial hire purchase is similar in spirit, but you take formal ownership only after the final payment. Buying suits operators who keep gear for the long haul, who want the asset on their balance sheet, and who value owning a machine outright once it is paid off.
What Leasing Looks Like
Leasing means the lender owns the asset and you pay to use it for a set term. There are two main flavours. A finance lease gives you use of the asset for a fixed term with a residual value at the end, and options to pay out, refinance or return it. An operating lease is closer to a long-term rental, often with maintenance bundled in, and you simply hand the asset back at the end. With a lease, you generally deduct the lease payments as a business expense and claim GST on each payment rather than upfront. Leasing suits operators who want to preserve capital, who upgrade often, or who run equipment that dates quickly and is better handed back than owned.
Buy vs Lease: The Trade-Offs
Line the two up and the differences are clear:
- Ownership: buying gives you the asset (immediately under a chattel mortgage, or at term end under hire purchase). Leasing keeps ownership with the lender.
- Tax: buying lets you claim depreciation or the write-off plus the GST credit upfront. Leasing lets you deduct the payments and claim GST as you go. Which leaves you better off depends on your turnover and structure.
- Your books: a purchased asset and its loan sit on your balance sheet. An operating lease can keep the asset off it, which some operators prefer.
- End of term: buy and the machine is yours to keep, sell or trade. Lease and you return it, pay out the residual, or refinance.
- Flexibility: leasing makes regular upgrades simple. Buying rewards operators who run gear well past the finance term.
Which Suits Your Situation
The right call depends on the operator, not the asset alone.
Owner-operators keeping gear long term usually come out ahead buying, because the asset keeps earning long after it is paid off. Growing fleet contractors who upgrade on a cycle often prefer leasing or a chattel mortgage with a balloon, so they can roll into newer gear without tying up capital. Operators running fast-moving technology, where a machine dates before it wears out, may be better off leasing and handing it back. Seasonal operators can shape repayments around when the work and the income actually land, under either path. You can compare the repayment on different terms and structures with the Equifund Finance Calculator before you decide.
The Tax Angle, in Short
Tax is often the deciding factor, and it is where buying and leasing differ most. Buying under a chattel mortgage lets eligible businesses claim the asset's cost through depreciation or the instant asset write-off, claim the GST credit upfront, and deduct the interest. Leasing instead makes the regular payments deductible, with GST claimed on each one. Neither is automatically better; it depends on your turnover, your structure and your plans. For the full picture, see our guide on how equipment finance is taxed in Australia, and confirm your position with your accountant before you commit.
How Equifund Can Help
Equifund is a commercial finance broker built for operators, not paperwork. We compare 80+ lenders across the major banks and specialist equipment financiers to find the structure and rate that fit how your business actually runs, then handle the lender back-and-forth so you can keep working.
- Pre-approval in 24 hours
- No impact on your credit score to get a rate
- Finance amounts up to $2M
- Owner-operators, ABN holders and company structures welcome
Pre-approval and quotes are obligation-free; a brokerage fee applies on settlement and is disclosed in writing before you sign. Get a Rate and Weigh Up Your Options with no impact on your credit score.
Frequently Asked Questions
Is it better to buy or lease equipment?
Neither is automatically better. Buying suits operators who keep gear long term and want ownership and the upfront tax benefits. Leasing suits those who upgrade often or run equipment that dates quickly. The right answer depends on how you use the asset, your tax position and your end-of-term plans.
What is the difference between a chattel mortgage and a lease?
Under a chattel mortgage you own the asset from day one and the lender holds a security interest, so you claim depreciation and the GST credit upfront. Under a lease the lender owns the asset and you pay to use it, deducting the payments and claiming GST as you go. Ownership and tax treatment are the main differences.
Does buying or leasing give a better tax outcome?
It depends on your turnover and structure. Buying lets eligible businesses claim depreciation or the instant asset write-off plus the GST credit upfront, while leasing makes the payments deductible over the term. Your accountant is best placed to model which works out better for your situation.
Can I own the equipment at the end of a lease?
With a finance lease you can usually pay out the residual value to take ownership, refinance it, or return the asset. An operating lease is designed for you to hand the asset back at the end. If owning the gear matters to you, a chattel mortgage or hire purchase is usually the cleaner path.
Which is better for a growing fleet?
Growing fleets that upgrade on a cycle often prefer leasing or a chattel mortgage with a balloon, because it frees up capital and makes rolling into newer gear simpler. Operators who run machines well past the finance term usually do better buying. A broker can structure either across multiple assets.
Can I finance used equipment, or only new?
Both new and used equipment can be financed under either path. Some banks cap the age or hours they will fund, so a broker with a wide lender panel is useful for older machines. The buy-versus-lease decision applies regardless of whether the asset is new or used.
Does getting a quote affect my credit score?
With Equifund, getting an indicative rate has no impact on your credit score. A formal credit check only happens later, with your consent, once you decide to proceed to a full application.
Disclaimer: This article is general information only and does not constitute financial, tax or legal advice. It does not take into account your personal circumstances, objectives or needs. Equifund Financial Group is a commercial finance broker, not a registered tax agent or licensed financial adviser. Tax treatment depends on individual circumstances and current ATO rules. Confirm with your accountant before relying on any tax position. All finance is subject to lender credit assessment, terms and conditions. Rates, lead times and product availability are indicative and current at time of writing, and may change. Market figures, sales data and forecasts cited reflect publicly available data at the time of publication.