Asset finance · finance lease
Lease the asset, account for it like ownership.
The lender owns the asset, you lease it for substantially its useful life and accept residual value risk at the end. Treated like a purchase for accounting and tax purposes. Suits businesses that want fixed lease costs but ownership-equivalent treatment.
What it is, when it fits
Plain English, with the trade-offs.
A finance lease is an asset finance structure where the lender owns the asset and leases it to you for substantially its useful life. You accept residual value risk at the end (you either purchase the residual, refinance it, or sell the asset and settle the residual to the lender). Critically, accounting standards generally treat finance leases as the equivalent of a purchase: the asset sits on your balance sheet, depreciation runs as if you owned it, and lease payments split into principal and interest for tax purposes. Finance leases suit businesses that want fixed lease costs across the term plus ownership-equivalent accounting/tax treatment, particularly for technology refresh cycles, fleet leasing where replacement is predictable, equipment with rapid obsolescence, or accounting-driven structure preferences. Pricing tracks closely with chattel mortgage; the meaningful differences are residual treatment and the legal-ownership distinction.
Hands reviewing finance documents over a paper-strewn table.
Typical scenarios
Technology refresh cycles
Why: IT hardware refreshed every 3 years; ownership transfer at end-of-term unnecessary.
Outcome: Finance lease aligned with refresh cycle, residual sized so trade-in covers it.
Fleet leasing for predictable replacement
Why: Car or light commercial fleet replaced on schedule.
Outcome: Finance lease per vehicle, residuals matched to expected resale value.
Equipment with rapid obsolescence
Why: Specialised equipment likely to be obsolete in 3 to 5 years.
Outcome: Finance lease covers useful life; residual handled at end-of-term.
Accounting-driven structure preferences
Why: Specific accounting treatment required by parent company or auditor.
Outcome: Finance lease structure documented with accountant before signing.
Lenders for this product
Who we work with.
- Macquarie Leasing
- Pepper Asset Finance
- Flexi Commercial
- NAB Equipment Finance
Lender accreditation varies; not every lender is available for every deal. We pick from the panel based on your specific situation.
How it works
From brief to settlement.
- 01
Accounting consultation
Finance lease structure has real accounting consequences. We coordinate with your accountant before recommending the structure.
- 02
Residual sizing
We work with you on residual sizing so the end-of-term picture isn't a surprise. Residual size shifts both monthly cost and end-of-term risk.
- 03
Lender selection and approval
Specialist leasing lenders dominate this category. Approval typically returns within 48 hours.
- 04
Settlement and end-of-term planning
Lease goes live; we revisit the end-of-term plan around the 12-month-out mark to give time to organise refinance or trade-in.
Indicative pricing & terms
Ranges, not promises.
Rate range
6 to 11% p.a. effective
Loan size
$20K to $2M
Term
1 to 5 years
Security
Lender owns the asset; lessee bears residual risk
Indicative only; specific pricing depends on lender, security, and your business profile.
Frequently asked
Honest answers, plain English.
Finance lease vs operating lease accounting differences?
Under a finance lease the asset and a corresponding liability sit on the balance sheet (under most accounting frameworks). Operating leases sit off-balance-sheet under older standards; under IFRS 16 / AASB 16, most leases now go on balance sheet, narrowing the historical distinction. Speak to your accountant about your specific framework.
Residual value risk?
You bear it. At end-of-term you can purchase the residual, refinance it, or sell the asset and settle the residual to the lender. If the asset value is below the residual, the shortfall is yours to cover; if above, the surplus is yours to keep.
Lease vs buy decision framework?
Finance lease usually wins where the residual market is well-understood (vehicles, mainstream IT) and you want fixed lease costs. Chattel mortgage usually wins where you want clean ownership and the GST claim upfront. Operating lease wins where you don't want the residual risk at all.
Tax treatment?
Lease payments are deductible as they're incurred (split principal/interest under most standards). Depreciation also runs through the books on the leased asset under accounting treatment, but the tax structure depends on whether the lease is structured as a financial or operating lease for tax purposes.
End-of-lease options?
Three options: pay the residual and own the asset; refinance the residual into a new lease; return the asset and let the lender sell it (lessee covers any shortfall vs residual). Plan the end-of-term move at lease commencement, not in the final month.
Suitability for IT equipment?
Often a strong fit because residual values for mainstream IT are predictable and the refresh cycle matches lease term. Check that the residual structure leaves room for an honest trade-in at end-of-term.
Related products
If this isn't quite the fit.
Next step
Twenty minutes, no obligation.
Tell us the shape of the deal and the timing. We'll send a lender shortlist for finance lease or, if it isn't the right fit, an honest signal of what is.