Equipment Finance Comparison - Chattel Mortgage vs Lease
Compare a chattel mortgage, a finance lease and an operating lease on the same asset. The repayments are often similar - what differs is who owns the asset, when you claim GST, and whether you depreciate the asset or deduct the payment.
Your details
25% for base rate entities, otherwise 30%
| Amount financed | $120,000 |
| Residual / balloon (30%) | $36,000 |
| Total repayments over the term | $118,703 |
| Total cost including residual | $154,703 |
| Total interest | $34,703 |
| Chattel mortgage | Finance lease | Operating lease | |
|---|---|---|---|
| Who owns the asset | You, from day one | Financier during the term | Financier - you never own it |
| On your balance sheet | Yes - asset and liability | Yes - right of use asset | Generally off balance sheet |
| GST on the asset | Claim it all in the next BAS | Claimed on each payment | Claimed on each payment |
| GST benefit | $12,000 | $15,470 | $12,820 |
| What you deduct | Interest + depreciation | The full lease payment | The full rental |
| Deductions over the term | $154,703 | $154,703 | $128,200 |
| Approx. tax benefit | $38,676 | $38,676 | $32,050 |
| End of term | Pay the balloon, keep it | Pay the residual or refinance | Hand it back or re-rent |
| Suits | Assets you keep long term | Assets you keep, with lower upfront GST cash | Assets you replace often |
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Frequently asked questions
Which is cheapest?
On the raw repayment a chattel mortgage and a finance lease are usually close. The real difference is cash flow and tax timing: the chattel mortgage returns the GST immediately, the lease spreads it.
Does an operating lease keep debt off my balance sheet?
Historically that was the main appeal. Accounting standards have tightened, and most leases now bring a right-of-use asset onto the balance sheet. Check with your accountant for your reporting framework.
General advice warning: This calculator provides general information only. It does not take into account your objectives, financial situation or needs, and it is not personal credit or financial advice.
Results are estimates based on the inputs and assumptions shown. Any interest rate used is an example and is not an offer of credit. Speak to a licensed credit representative before acting on these figures.