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Asset Finance Structures Explained

Chattel Mortgage, Finance Lease, or Operating Lease — the right structure depends on your GST status, cash flow goals, and whether you want to own the asset. Compare them all below.

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Finance structures

Three Ways to Finance Your Asset

Each structure has different ownership, tax, and cash flow outcomes. Choose the one that matches your business goals.

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Chattel Mortgage

You own the asset from Day 1. Claim the full GST credit upfront on your next BAS, plus deduct interest and depreciation each year. The most popular structure for GST-registered businesses.

  • ✓ Immediate ownership
  • ✓ GST claimed upfront
  • ✓ Interest + depreciation deductions
  • ✓ Optional balloon payment
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Finance Lease

The lender owns the asset and leases it to you. Payments are 100% tax-deductible as an operating expense. At the end of the term, pay the residual to take ownership or hand it back.

  • ✓ Ownership at end of term
  • ✓ GST claimed monthly
  • ✓ Entire payment is deductible
  • ✓ Great for cash flow optimisation
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Operating Lease

Effectively a long-term rental — you never own the asset. Lowest repayments and 100% tax-deductible. Best for businesses that upgrade regularly or want zero residual risk.

  • ✓ No residual risk — return the asset
  • ✓ Lowest weekly repayments
  • ✓ 100% tax-deductible payments
  • ✓ Ideal for fleet rotation
Side-by-side

Structure Comparison

See how each structure differs across ownership, tax treatment, GST, and suitability.

Feature Chattel Mortgage Finance Lease Operating Lease
Ownership Immediate At end of term Return to lessor
GST Treatment Claim upfront Claim monthly Claim monthly
Depreciation Claim Yes (you're the owner) No No
Interest Deductible Yes N/A (rental deduction) N/A (rental deduction)
Balloon / Residual Optional Mandatory residual Built-in
On Balance Sheet Yes (asset + liability) Yes (AASB 16) Yes (AASB 16)
Best For GST-registered, want ownership Cash flow optimisation Short-term use, fleet rotation
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By asset type

Finance Guides by Asset

Rates, terms, and structures vary by asset type. Explore the guide for your industry.

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Trucks & Trailers

From $80k – $500k+
🚙

Utes & Commercial

From $35k – $120k
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Earthmoving

From $50k – $800k+
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Agricultural

From $40k – $600k+
⚙️

Machinery & Fitouts

From $10k – $500k
Common questions

Finance Structure FAQs

Which structure is best for my business? ▼
It depends on your GST registration, cash flow needs, and whether you want to own the asset. If you're GST-registered and want ownership from Day 1, a chattel mortgage is usually the best option. If you want lower repayments and don't mind paying a residual at the end, a finance lease works well. If you upgrade assets regularly and want the lowest payments with no residual risk, consider an operating lease. Our calculator compares all three side-by-side with your actual numbers.
What's the difference between a loan and a chattel mortgage? ▼
A chattel mortgage is a type of secured business loan where the asset itself is the security. Unlike a personal loan, you own the asset immediately while making repayments. The "mortgage" (charge) over the chattel (moveable asset) is removed once the loan is paid in full. It's the most common structure for ABN holders financing equipment in Australia.
Can I switch structures during the finance term? ▼
Generally no — the structure is set at the time of settlement. However, you can refinance into a different structure at any time (subject to payout costs and new lender approval). If you're unsure which structure to choose, our calculator and broker partners can help you make the right decision upfront.
Do I need to be registered for GST? ▼
You don't need to be GST-registered to get asset finance, but it changes which structure is best. GST-registered businesses benefit most from chattel mortgages (upfront GST credit). Non-GST businesses may prefer a finance lease or commercial hire purchase. Our calculator adjusts the comparison based on your GST status.
What is a balloon or residual payment? ▼
A balloon (chattel mortgage) or residual (lease) is a lump sum due at the end of the finance term. It reduces your regular repayments during the term. Typical values are 20–40% of the purchase price. At the end of the term, you can pay the balloon/residual to own the asset outright, refinance it, or trade in the asset.

Not Sure Which Structure Is Right?

Enter your asset details and our calculator will compare all three structures side-by-side — with tax estimates, repayment breakdowns, and eligibility scoring.

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