Finance lease

If you're considering a finance lease to buy tools, vehicles, or equipment – think Savvy and rest easy!

Finance lease

Finance leases are the ideal solution for Australian businesses in many trading environments. For sector-specific, more cost-effective finance, think Savvy.

Finance Leases for vehicles and equipment

Finance leases work by providing a cash flow-friendly way to use assets. Unlike with an operating lease, you also get the option to buy when the lease term ends. When you enter into a finance lease agreement, you specify or choose the plant, vehicle, or equipment you want to use; then, the financier buys the asset. You get the use of that asset for an agreed term in exchange for regular payments. Many Australian businesses choose this method to purchase assets because terms are flexible, and finance lease payments are always fixed.


Need a commercial finance lease? Stay Savvy

Savvy is the go-to commercial finance broker for thousands of Australian companies – and there are many reasons for that. We partner with the country’s top business financiers to offer a broad range of competitively priced commercial finance options – and we go out of our way to find the right solution for your business so that you don’t have to. At Savvy, our experts have established relationships with lenders that specialise in your sector. That enables us to offer practical, cost-effective, and relevant finance lease options.


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Don't get a finance lease until you get Savvy. The pros and cons of a commercial finance lease explained.


Payments are spread over the term of the lease and based on the GST-free value of the asset

The interest portion of payments is always tax-deductible, and you can claim the entire amount in some circumstances.

Claim GST on regular payments throughout the agreement, as well as on the residual amount at the end of the term.


Not suitable for businesses that want to change out tools, machinery, vehicles, or equipment regularly.

Entire payments may not be classed as tax-deductible by the ATO

During the agreement, you don’t own the asset, so you can’t claim for depreciation.

Why do Australian businesses use finance leases?

Whichever option you choose at the end of a finance lease, the benefit remains the same – you get access to high-quality equipment or vehicles without the capital outlay required to buy them outright.

  • The structure of the regular lease payments serves to spread the cost over a period up to five years.
  • The residual amount further protects your cash flow because it reduces the amount of those regular payments.

The flexibility in a finance lease has got a lot to do with providing options when you can’t do without an asset – both in terms of your capital and equipment needs.

  • It’s a manageable way to get access to machinery or vehicles at the start of your agreement, because it distributes the cost burden over several years, if necessary.
  • When the term ends, it’s equally flexible because you can refinance the residual, pay off the finance, or trade in and get access to a new asset – depending on where your business is at financially, and whether you’d benefit from new equipment.

What about GST and a finance lease?

When the lessor purchases the asset at the start of a finance lease, they pay the GST, so they’re entitled to claim it back. The good news regarding that is they then lease the asset to you, excluding GST. As a GST-registered business, you’re still entitled to claim back the GST on regular lease payments. If you decide to purchase the vehicle at the end of the finance lease term, the lessor will charge GST on the price, and you can also claim that back when your next BAS is due.

Questions about a commercial finance lease? Read the FAQs

It pays to get savvy when you source business finance, so we put together the most frequently asked questions we hear.

How long is a finance lease?
Finance lease agreements generally run for periods between one year and five years, which makes them easy to tailor and suitable for most budgets.
Who owns the asset during a finance lease agreement?
The lessor (the financier leasing you the asset) owns the vehicle or equipment for the finance lease term’s entire duration.
What happens at the end of a finance lease term?
At the end of a finance lease, you get three options. First, you can purchase the asset with your own funds for the pre-agreed residual amount. Second, you can refinance the residual amount and continue to use the asset. Third, you can trade in the equipment or vehicle and start a new lease agreement for a new acquisition.
When wouldn't I use a finance lease?
You might opt to use a commercial operating lease to buy equipment or a vehicle if you didn’t plan on using the asset for a long time or if you wanted to upgrade regularly. That’s because an operating lease typically runs for a shorter term (one or two years), and you’re not obliged to buy or pay a residual when the agreement ends.
If I can't claim finance lease payments as tax-deductible, what can I do?
In that case, you can still claim the interest portion of your payments. Finance lease payments work on an amortising scale – which means at the start of the lease, you owe more money, and a larger proportion of that gets formed from interest. As the agreement progresses and you owe less, the portion of interest is lower. That results in you claiming more tax at the start of the contract than at the end. That doesn’t change each payment’s total value as your agreement progresses – that gets calculated at the beginning of the term and doesn’t change.

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