What is a Finance Lease?
Finance leases are a popular and flexible finance option for Australian businesses looking to acquire vehicles, equipment, or other essential assets, without the burden of large upfront costs.
Whether you’re a small business owner, sole trader, or growing enterprise, a finance lease can help you access what you need now while preserving your cash flow.
What is a Finance Lease?
A finance lease is a type of asset finance agreement where your business pays regular instalments to use an asset over a fixed period, without owning it outright during the lease term.
At the end of the lease, you generally have the option to:
- Purchase the asset for its residual value
- Return the asset to the finance provider
- Refinance or upgrade to a newer asset
This structure allows businesses to use vehicles or equipment without paying the full purchase price upfront, making finance leases a practical and accessible solution.
How does a Finance Lease work?
In a typical finance lease arrangement:
- The finance provider purchases the asset on your behalf
- Your business leases the asset for an agreed term (usually 2–5 years)
- You make monthly lease payments, covering depreciation, interest, and sometimes maintenance
- At the end of the lease, you can buy, return, or refinance the asset
Because ownership stays with the lender during the lease term, finance leases often provide greater flexibility than traditional loans.
Benefits of a Finance Lease
Finance leases offer several advantages that make them attractive for business and commercial finance:
Improve Cash Flow
Finance leases typically require a lower initial outlay than buying outright, helping you keep cash available for day-to-day operations.
Access the Latest Equipment
Upgrade vehicles or equipment more regularly without large capital commitments—ideal for businesses that rely on modern assets.
Potential Tax Benefits
In many cases, lease payments may be tax-deductible. (We always recommend speaking with your accountant for personalised advice.)
Flexible Terms
Lease terms can be tailored to match the asset’s expected working life, ensuring the finance suits your business needs.
Finance Lease vs other finance options
Hire Purchase
You make regular repayments and own the asset at the end of the term. Best suited for those who want eventual ownership.
Chattel Mortgage
You own the asset from the start, while the lender holds it as security until the loan is repaid. Common for GST-registered businesses.
Novated Lease
A three-way agreement between an employee, employer, and leasing company. Payments are made from pre-tax salary and may offer tax advantages.
Each option has different tax, ownership, and cost implications, so it’s important to choose the structure that aligns with your financial strategy.
Is a Finance Lease right for you?
Finance leases provide a smart way to access vehicles and equipment without tying up capital or committing to ownership upfront. With flexible structures, potential tax advantages, and multiple end-of-lease options, they offer both control and convenience.
At RLA Finance, we’ve been helping North Queensland businesses and individuals access smarter funding solutions for over 35 years. Whether you’re a business owner, sole trader, or employee, we take the time to understand your goals and match you with the right finance or leasing solution.
Get in touch with RLA Finance today to explore whether a finance lease is the right fit for you.