🚛 Chattel Mortgage, Hire Purchase, or Lease – Which Equipment Finance Option is Right for You?

When it comes to financing business equipment or vehicles, choosing the right finance structure can save your business thousands in tax benefits while ensuring smooth cash flow. Whether you're purchasing trucks, machinery, or company vehicles, the right finance option will depend on your business goals and financial position.

In this guide, we’ll break down three of the most common equipment finance options—Chattel Mortgage, Hire Purchase, and Lease Agreements—so you can make the best decision for your business.

1. Chattel Mortgage (Equipment Loan)

What Is It?

A Chattel Mortgage is a very popular finance option where you own the equipment outright from day one, but the financier holds it as security for the loan.

Who Owns the Asset?

✅ You own the asset immediately

✅ The financier registers a security interest over it until the loan is repaid

GST & Tax Benefits

✔ Claim GST upfront on the purchase price in your next Business Activity Statement (BAS)

✔ Interest and depreciation are usually tax-deductible

Best For:

🔹 Businesses that want ownership from day one

🔹 Those looking to claim GST upfront and benefit from depreciation deductions

2. Hire Purchase

What Is It?

A Hire Purchase agreement allows your business to buy equipment through structured payments. However, ownership is only transferred once the final payment is made.

Who Owns the Asset?

❌ The financier owns the asset until the agreement is completed

✅ Once the last payment is made, ownership transfers to you

GST & Tax Benefits

✔ Claim GST upfront on the purchase price in your next BAS

✔ Unlike a Chattel Mortgage, GST is also payable on interest and fees

✔ Interest and depreciation are usually tax-deductible

Best For:

🔹 Businesses that want to spread payments over time but own the asset eventually

🔹 Those comfortable with GST on interest & fees

3. Lease

What Is It?

With a Lease Agreement, the financier buys the equipment and rents it to your business for a fixed term. You never own the asset, but you can choose to upgrade or buy it at the end of the lease.

Who Owns the Asset?

❌ The financier retains ownership throughout the lease

✅ At the end of the term, you may have the option to upgrade, return, or purchase the asset

GST & Tax Benefits

✔ Lease payments are fully tax-deductible as a business expense

✔ No need to worry about depreciation

Best For:

🔹 Businesses that prefer flexibility and cash flow control

🔹 Companies that frequently upgrade their equipment or vehicles

Which Equipment Finance Option is Best for Your Business?

The right choice depends on your business cash flow, tax strategy, and growth plans. Speaking with your accountant and working with an experienced finance broker can help you secure the best deal tailored to your needs.

🚀 Get the Right Equipment Finance Solution – Fast!

At A Class Business Finance, we specialize in securing tailored finance solutions for businesses across Australia. Whether you're looking to finance trucks, machinery, or vehicles, we help you navigate the options, maximize tax benefits, and get fast approvals.

📞 Call us today at 07 3488 1500

📩 Or get a quick quote online: www.aclassteam.com.au 

Let’s help you get the equipment you need—without the stress!

Written by Amanda Tomkins

Senior Finance Broker