Finance Lease

A finance lease is a type of asset finance that enables your business to lease the equipment it needs, with the option to purchase it at the end of the lease by making a final payment for a predetermined amount (residual value). The lender buys the asset and retains ownership until the end of the lease, while you get full use of the asset in return for regular payments. 

This lease is generally used for long-term high-value assets such as company vehicles, medical equipment, or heavy machinery. It will often have lower interest rates than other types of equipment finance because your company takes on responsibility for maintaining the asset during the lease.

A Finance Lease is a convenient way to spread the asset’s cost over time while using it in the interim. It comes with the option to return or own the asset outright with a final residual payment. The business will profit from the purchase if the asset is worth more than the residual.

• Less initial cash investment required
• It doesn’t require a deposit or security other than the asset financed
• Immediate access to your business equipment once purchased
• Spread the cost over the entire economic life of the asset
• Generally, payments are tax-deductible and reduce the tax the business pays
• Fixed repayments can be tailored to suit cash flow over the term of the agreement
• Option of ownership at the end of the lease

• Hospitality
• Restaurants & cafes
• Catering 
• Construction
• Mining
• Medical 
• Tradies
• Manufacturing

The lender purchases the asset on behalf of your business. You then pay them a fixed monthly lease rental and interest for the lease term. The business often buys the asset at the end of the leasing period for an agreed price, or it returns to the lender.

The asset is listed on your business’s balance sheet, and lease repayments are generally tax-deductible. Fixed-rate payments ensure they will stay the same regardless of changes to interest rates. Your company is responsible for the asset and must cover additional costs such as repairs, maintenance, or servicing.

You’ll end up paying 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.