Is a finance lease or operating lease better for a company vehicle fleet?

For fleets that refresh every 2–4 years and want predictable all-in monthly cost, a fully maintained operating lease (FMOL) is usually the better fit — the lender carries residual-value risk and running costs can be bundled in. A finance lease suits businesses that want lease accounting but expect to keep the asset, with an option to buy at the residual at the end.

Which asset finance structure lets me claim GST upfront?

Hire purchase and chattel mortgage generally let a GST-registered business claim the full GST on the asset cost upfront (subject to your GST basis). Finance lease and operating lease instead charge GST on each lease payment, so you claim it progressively. Confirm the treatment for your situation with your accountant.

Which structure keeps the asset off my balance sheet?

Historically an operating lease was off balance sheet. Under NZ IFRS 16, most leases of more than 12 months now come onto the balance sheet as a right-of-use asset and lease liability, so the off-balance-sheet advantage is largely gone for entities reporting under IFRS. Small businesses on simplified reporting may differ — check with your accountant.

Do these rates, terms and deposits change?

Yes. Every figure here is indicative only and varies by lender, asset, term and your business credit profile. All finance is subject to lender credit approval. Use them as a guide, then get matched to the lenders most likely to fund your specific asset.

Compare asset finance structures

Hire purchase vs finance lease vs chattel mortgage vs operating lease

The four ways NZ businesses finance vehicles, equipment and machinery — compared on ownership, tax, GST and balance sheet, so you can pick the right one.

Quick answer

New Zealand businesses fund assets four main ways. Hire purchase and chattel mortgage both end in you owning the asset and claiming depreciation — chattel mortgage gives ownership from day one with GST claimable upfront, hire purchase transfers title on the final payment. Finance lease and operating lease are rental-style: the lender owns the asset and you deduct the lease payment as an expense, with an operating lease handed back at the end and a finance lease offering a buy-out at residual. Indicative rates start from around 7.6% p.a. across the ownership structures, with terms of 24–60 months. The right structure depends on whether you want ownership, how you want the tax and GST to fall, and how the asset sits on your balance sheet.

	Hire Purchase	Finance Lease	Operating Lease	Chattel Mortgage
Who owns it during the term	Lender (holds security)	Lender	Lender	You — from day one
Who owns it at the end	You — automatic on final payment	Lender (option to buy at residual)	Lender — you hand it back	You (you already own it)
Balance sheet	On (asset + liability)	On under IFRS 16	On under IFRS 16	On (asset + liability)
Who claims depreciation	You	Lender	Lender	You
Main tax deduction	Depreciation + interest	Full lease payment	Full lease payment	Depreciation + interest
GST on the asset	Claim upfront on asset cost	GST on each payment	GST on each payment	Claim upfront on asset cost
Typical term	24–60 months	24–60 months	24–48 months	24–60 months
Deposit	0–20%	$0 (sometimes 10% advance)	$0	0–20%
Indicative rates	From ~7.6% p.a.	Similar to hire purchase	Built into the rental	From ~7.6% p.a.
End of term	You own it	Buy, re-lease or hand back	Hand it back	You own it (already do)
Best for	Owning the asset + claiming depreciation	Operating-expense treatment	Fleets / IT — predictable cost + refresh	GST-registered, ownership from day one

Indicative only — not financial or tax advice. Treatment depends on your circumstances and accounting standard; confirm with your accountant. All finance is subject to lender credit approval.

Which structure should I choose?

Hire Purchase

The most common way Kiwi businesses finance vehicles, equipment and machinery. Fixed payments, you own the asset at the end of the term.

Full guide →

Finance Lease

The lender buys the asset and leases it to your business over its useful life. Lease payments are an operating expense. Common for plant, machinery and IT.

Full guide →

Operating Lease

Rental-style finance — you pay to use the asset for a fixed term and hand it back at the end. Common for fleet vehicles and IT, often bundled with maintenance.

Full guide →

Chattel Mortgage

You own the asset from day one and the lender registers a security interest. A popular structure for GST-registered businesses that want to claim GST on the asset upfront.

Full guide →

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Frequently asked questions

Both let you own the asset and claim depreciation and the interest portion of each payment. The key difference is timing of ownership and GST: with a chattel mortgage you own the asset from day one and can claim the full GST on the asset cost upfront; with hire purchase the lender holds title until the final payment, though GST is still generally claimable upfront. Economically they are very similar — chattel mortgage is often preferred by GST-registered businesses that want day-one ownership.