Leasing vs buying business equipment: a decision you make per asset, not per business

There’s no single right answer to “should my business lease or buy?”, and owners who try to pick one policy for everything usually end up overpaying somewhere. A deck oven that will bake for fifteen years and a point-of-sale system that will feel old in three are different propositions. The better approach is to run each asset through a few questions: how long you’ll use it, how fast it dates, what it does to cash and tax this year, and whether you might want to borrow against it later.

Three ways to get the equipment

It helps to split “buying” in two, because paying cash and borrowing to buy behave very differently on cash flow.

	Pay cash	Buy with finance	Lease
Who owns it	You, immediately	You (chattel mortgage) or you at the last payment (hire purchase)	The financier or leasing company
Upfront cash	The full price	Little or none; sometimes a deposit	Little or none; sometimes rentals in advance
GST	Claimed on the next BAS	Usually claimed upfront on the next BAS	Claimed bit by bit within each payment
Tax deductions	Depreciation or the instant asset write-off	Depreciation or the write-off, plus interest	Lease payments, to the extent of business use
End of the road	You keep or sell it	You keep or sell it once any balloon is cleared	Return it, or pay a residual under a finance lease
Servicing	Your cost	Your cost	Sometimes included under an operating lease
Later borrowing	Can support refinancing or a sale and leaseback	Can be refinanced once equity builds	Not available as security

business.gov.au frames the trade-off in balanced terms: leasing is easier on cash and makes upgrades simple, while buying gives you something you can modify, sell and count as your own. It also warns that a lease can leave you paying out the full term even after you’ve stopped using the item.

The questions that decide each asset

How long will you keep it? If the answer is “until it falls apart”, buying usually wins. Once the finance is paid off, the asset keeps earning with no further payments.

How fast does it date? Technology, imaging equipment and some fleet vehicles lose value or relevance well before they wear out. Leasing hands that obsolescence risk to someone else, particularly under an operating lease.

Does the instant asset write-off apply? If your aggregated turnover is below $10 million, an eligible asset priced under $20,000 can be written off in full in the year it’s first used or installed, a concession that became permanent from 1 July 2026. Only the owner can claim it, so for a sub-$20,000 item, buying (with cash or finance) often wins on tax timing alone.

What will the cash do instead? Paying $80k cash for a machine might mean no buffer for a slow quarter. Borrowing to buy keeps that buffer and still delivers ownership; the equipment finance vs paying cash comparison covers that choice in depth.

Might you want to borrow against it later? Owned equipment with real value can be refinanced, or sold and leased back to release cash. Leased equipment can’t play that role.

Trying to decide on a particular machine or vehicle? Tell us what you’re looking at; it takes about a minute.

A worked example: one bakery, three decisions

An illustrative suburban bakery is expanding into wholesale and needs three things.

A $95k deck oven, expected to last fifteen years or more. The owners buy it with a chattel mortgage over five years. They own it from delivery, claim the GST on the next BAS and depreciate it over its effective life. Once the loan is repaid, the oven keeps baking for another decade with no payments.

An $18k spiral mixer. It qualifies for the instant asset write-off, so the bakery buys it with cash from the first wholesale contract. The full cost is deducted in the year it’s first used.

$14k of point-of-sale terminals, tablets and a delivery-route laptop. These will feel dated in three years, so the bakery takes an operating lease with replacement built in. There’s no residual and no secondhand electronics to sell later.

Run as a single policy, either “lease everything” or “buy everything” would have cost the bakery more. Our page on bakery finance looks at how lenders view the sector.

When buying wins

• Long-life equipment you’ll run well past the finance term: ovens, compressors, presses, earthmoving gear, trailers.
• Items under $20,000 where the instant asset write-off gives a full deduction this year.
• Assets you’ll modify, sign-write or move between sites freely.
• Equipment with strong resale value, where you want the upside when you eventually sell.
• Assets that might later support borrowing. See sale and leaseback vs a business loan for how owned equipment can release cash.

If you want ownership without the cash outlay, compare a chattel mortgage and hire purchase.

When leasing wins

• Technology and fast-dating gear, where you want a fresh model every few years.
• Fleets you don’t want to manage, with servicing, tyres and registration bundled into one payment.
• Short or uncertain needs, such as a contract of a few years or a trial of new equipment.
• Tax timing that favours expense treatment, which your accountant can model.
• When cash and borrowing capacity are already stretched, and the business would rather keep its balance sheet clear for other finance.

Before you commit, check

1. How long will you realistically keep this asset?
2. Does it qualify for the instant asset write-off, and is your turnover under $10 million?
3. What is the total cost of each option over the period you’ll use it, including any residual, balloon or return charges?
4. What happens if you need to stop early?
5. Who services it, and what would that cost you separately?
6. Could owning it help you borrow later?

The equipment finance calculator is a quick way to test repayments for the buy-with-finance option, and our equipment finance page explains how lenders assess applications.

Getting the gear without draining the account

Once you’ve decided which items to buy and which to lease, the next step is getting approval at a sensible total cost, which isn’t always easy for newer businesses or anyone with a hiccup in their credit history. That’s everyday work for us. It takes about sixty seconds to enquire, and doing so won’t leave a footprint on your credit report. Your information isn’t scattered across a stack of financiers. Instead, a real person on our team weighs up your circumstances and then rings for a chat. List the equipment, prices and your trading numbers accurately, and we can suggest the right mix of buying and leasing from the start.

Plan your equipment finance with us →