When it comes to acquiring business equipment—whether it’s tools, vehicles, or heavy machinery—one of the biggest decisions you’ll face is whether to lease or buy. Each option comes with its own set of benefits and trade-offs, and the right choice often depends on your cash flow, tax goals, and long-term plans.

In this guide, we’ll break down the pros and cons of leasing versus purchasing equipment with a loan, so you can make a confident, cost-effective decision for your business.

Table of Contents

• What’s the Difference Between Leasing and Buying?
  
• Pros and Cons of Leasing Equipment
  
• Pros and Cons of Buying Equipment with a Loan
  
• Key Factors to Consider Before Choosing
  
• How Capital Plus Finance Can Help
  

What’s the Difference Between Leasing and Buying?

Buying equipment with a loan means you take ownership of the asset right away and pay it off over time—often through a chattel mortgage or business loan. Once the loan is repaid, the equipment is yours.

Leasing, on the other hand, is like renting. You pay regular instalments to use the equipment over a set term, but you don’t own it (unless there’s a buyout clause at the end of the lease).

Each approach has its place, depending on your business’s needs, financial position, and equipment usage.

Pros and Cons of Leasing Equipment

Leasing is a popular option for small business owners who want flexibility or access to the latest gear without a large upfront investment.

✅ Pros of Leasing:

• Preserves cash flow: No large upfront payment required
  
• Tax deductible: Lease payments are usually 100% tax-deductible as operating expenses (check with your accountant)
  
• Easy upgrades: Upgrade to new equipment when your lease ends
  
• Flexible terms: Short- and long-term leases available
  
• Off-balance sheet: Leases may not appear as liabilities (depending on structure)
  

❌ Cons of Leasing:

• No ownership: You won’t build equity in the equipment
  
• Higher long-term cost: Total lease payments may exceed purchase price
  
• Restrictions: May come with usage limits or maintenance requirements
  
• Ongoing payments: You’ll need to budget for continued leasing if you want to keep the equipment
  

Best for: Equipment that depreciates quickly, needs frequent updating, or is only needed short-term (e.g., IT gear, specialist tools, vehicles).

Pros and Cons of Buying Equipment with a Loan

Buying with a business equipment loan or chattel mortgage gives you full ownership—an appealing option for core assets you plan to use long-term.

✅ Pros of Buying:

• Full ownership: The asset is yours at the end of the loan term
  
• Asset depreciation: You can claim depreciation and interest as tax deductions (ask your accountant)
  
• Customisation: You can modify or resell the equipment
  
• Long-term cost savings: May be cheaper than leasing over time
  
• Useful for financing large or durable assets like trucks, excavators or factory machinery
  

❌ Cons of Buying:

• Upfront costs: May require a deposit or higher initial cash outlay
  
• Tied-up capital: Funds used for a purchase could be used elsewhere
  
• Risk of obsolescence: You bear the risk if the equipment becomes outdated
  
• Maintenance: You’re responsible for ongoing maintenance and servicing
  

Best for: Essential equipment you’ll use for many years and expect to retain value (e.g., construction equipment, farming machinery, vehicles).

Key Factors to Consider Before Choosing

Here are the main things to weigh up when deciding between leasing and buying:

📌 Budget and cash flow

• Do you have funds for a deposit, or need to preserve cash flow?
  

📌 Asset usage

• Will you use the equipment regularly or for a limited time?
  

📌 Tax implications

• Would you benefit more from claiming lease payments or depreciation?
  

📌 Technology lifecycle

• Will the equipment stay relevant for years, or become outdated quickly?
  

📌 Flexibility vs. stability

• Do you prefer to own and customise, or stay flexible with short-term commitments?
  

Leasing and buying each suit different business goals—there’s no one-size-fits-all. In some cases, a mix of both may be the best solution.

How Capital Plus Finance Can Help

At Capital Plus Finance, we help Australian small business owners make smart, tailored decisions about equipment finance. Whether you’re thinking of leasing a new vehicle, buying long-term machinery, or comparing loan structures, we’ll guide you through every step.

We work with over 40 lenders to help you:

🔧 Compare lease vs. loan options based on your business needs
🔧 Secure competitive rates on equipment finance and small business loans Australia-wide
🔧 Structure repayments to match your cash flow or seasonal income
🔧 Understand tax and ownership implications
🔧 Access both low doc and full doc finance options for ABN holders

👉 Ready to invest in new business equipment? Speak with Capital Plus Finance today for expert advice and a tailored quote: https://capitalplusfinance.com.au/

About Capital Plus Finance

Capital Plus Finance is a Sydney-based vehicle and equipment finance broker helping Australian small businesses grow. Whether you need machinery, tools, vehicles, or working capital, we’ll help you find the right finance solution—quickly and easily.

Explore your options today at capitalplusfinance.com.au.