Should a tradie buy, lease or take a loan for equipment?

Three tradies need a new compressor. One pays cash and has nothing left for a week of wages. One borrows and owns it from day one. One leases it and hands it back in four years. All three made a reasonable call. The question is which call suits your gear, your cash and your plans.

What is the real difference between buying, leasing and borrowing?

	Buy with cash	Borrow with a loan	Lease
Who owns it?	You	You (lender may hold security)	Usually the lessor
Upfront cash	All of it	Little or none, depending on terms	Little or none
Payments	None	Regular repayments	Regular lease payments
At the end	You keep it	You keep it	Return, renew or buy, per the contract
Flexibility	Total, but cash is gone	Fixed term	Depends on contract
Best for	Cheap items, strong cash	Long-life, high-value gear	Fast-ageing gear, upgrade cycles

The monthly figure alone does not tell the whole story. Always ask for total cost over the term, any fees and what happens at the end.

When does buying with cash make sense?

Buying outright is simplest. There is no finance cost, no lender, and the gear is yours. It works well for low-cost items you will use for years, such as hand tools or a basic trailer. The risk is the opportunity cost: every dollar spent on a machine is a dollar unavailable for wages, materials or the quiet month that always arrives. A common rule among sensible operators is to keep a cash buffer for a few weeks of fixed costs before any large cash purchase.

When does a loan suit better?

A loan suits assets that hold value and last, such as hoists, trailers, mowers and plant. You own it from the start, which matters if you plan to run it for a decade or sell it later. Spreading the payments protects working capital. It also lets the equipment start earning straight away, so it helps pay for itself. Our page on equipment loans for tradies explains how these are structured.

When does a lease make sense?

Leasing can suit gear that ages quickly or changes with technology, because it gives you a path to upgrade. It can also suit a business that wants lower initial commitment and a predictable payment. The things to read carefully are:

1. The end-of-term payment or buyout. Some leases finish with a balloon-style payment.
2. Return conditions. Wear and damage can be charged.
3. Early exit. Ending a lease early can be costly.
4. Maintenance and insurance duties. Who carries them?
5. Tax and GST treatment. Ask your accountant.

If you do not understand a clause, ask for it in plain English before signing.

How does the tax angle compare?

This is where an accountant earns their fee. The ATO’s $20,000 instant asset write-off is permanent from 1 July 2026, according to the ATO. It allows eligible small businesses with turnover below $10 million to deduct the work-related share of any asset under that price in the year it is first used or installed ready for use. Whether a lease gets the same treatment depends on how it is structured and who counts as the owner, so do not assume. Ask before you sign, and see our instant asset write-off page.

Three routes, one purchase

Imagine the same item bought three ways, with round figures kept deliberately simple.

A mechanic needs a tablet-based diagnostic platform that will be dated in about three years, and a hoist that should last twenty. For the hoist, the mechanic takes a loan, since it is durable and the mechanic wants to own it. For the platform, a lease with an upgrade option at the end suits the technology cycle. Each structure matches the asset’s life. If the mechanic had put both on the same long loan, the platform would still be owed on after it was obsolete. Matching term to useful life is the principle.

Not sure which structure suits your gear? Say what you plan to buy, which takes about a minute, and a real person will talk you through the choices.

How do you decide for your own business?

Work through these questions in order:

• How long will it earn? Match the term to the useful life.
• Can the cash flow carry it in a slow month? Test it against your quietest period.
• Will you want to upgrade? If yes, favour leasing or shorter terms.
• Do you want to own it? If you plan to run it hard and sell it, favour a loan.
• What does the total cost come to? Compare all-in figures.

The equipment payback calculator helps with the second and last questions.

What about a line of credit instead?

Small, frequent purchases, such as replacement drill bits, blades and consumables, can be handled through a revolving facility rather than a formal equipment loan. A line of credit for tradies gives you a limit to draw on and clear, which suits unpredictable smaller outlays better than a fixed term loan.

What if the gear is second-hand?

Second-hand equipment is financed too, but lenders look closely at age and condition, and leasing options narrow for older items. Our second-hand equipment finance page explains what to expect.

How do you see if you qualify?

Nobody should choose a structure blind. Our form takes about 60 seconds and no credit check is run at that first step. Your details are not scattered among a crowd of lenders; a real person handles the enquiry and phones you. Be accurate about turnover, the item you are after and any tax debt, and we can find the best fit first go.

See which equipment finance structure fits you