# Finance lease — what it means for tradie equipment and plant > A finance lease lets NZ tradies use plant and equipment like an owner while the lender holds title. Here is how it compares to HP and an operating lease. Source: https://tradiefinance.co.nz/glossary/finance-lease Published: 2026-05-15T08:00:00.000Z Category: equipment-and-plant Tags: glossary, equipment-and-plant Image: https://tradiefinance.co.nz/images/resources/generated/tradie/glossary/finance-lease-primary.jpg Image alt: Plant and specialist trade equipment representing Finance lease — what it means for tradie equipment and plant --- A **finance lease** sits in a funny middle ground. On paper the financier owns the gear; in practice you treat it almost like it's yours. You use it for most of its working life, you cover the running and the value risk, and at the end you usually get the option to take title. For trades buying plant and equipment, that distinction changes the tax, the risk, and the maths. ## What it is In a finance lease, the lender buys the asset and leases it to your business for a fixed term — say a digger, a scaffold set, or a workshop hoist. You make regular lease payments and you carry the **risks and rewards** of using that asset: maintenance, the cost of running it, and what it's worth when the term ends. The financier keeps legal title the whole way through, but the deal is structured so that over the term you effectively pay off most of the asset's value. That last part is the key contrast with an [operating lease](/glossary/operating-lease), where you're really just renting — the lender keeps the value risk, hands the gear back at the end, and you walk away. A finance lease points the other way: it's built around you keeping or buying the asset. ## How it compares — and who carries the risk Three structures get muddled, so here's the plain version. | Structure | Who owns it | Who carries residual (end value) risk | Typical end of term | | --- | --- | --- | --- | | [Chattel mortgage](/glossary/chattel-mortgage) / [hire purchase](/glossary/hire-purchase) | You / lender holds security or title | You | Asset is yours outright | | Finance lease | Lender (legal title) | You | Buy it, re-lease, or sell and settle | | [Operating lease](/glossary/operating-lease) | Lender | Lender | Hand it back | So with a finance lease, you carry the **residual value** risk — if the asset is worth less than expected at term end, that's on you, much like a [balloon payment](/glossary/balloon-payment) on a vehicle loan. The reward side is the upside: if it holds value, that benefit is effectively yours too. On tax, the high-level difference is this. Under a [chattel mortgage](/glossary/chattel-mortgage) the asset is on your books from day one and you claim **depreciation** plus the interest portion of repayments. A finance lease is treated similarly for genuine business use — broadly, you can deduct the finance cost and depreciate the asset because you carry its economics — whereas an operating lease is usually a straight deductible rental. The lines between these can be fine, and GST treatment differs too, so don't guess: confirm the structure and the deductions with your accountant or IRD before you sign. ## When it suits trades A finance lease can fit when: - You want to use a piece of plant for most of its life and likely keep it, but prefer the lender to hold title during the term. - The gear holds value reasonably well, so carrying the residual risk doesn't worry you. - You want to spread the cost over the asset's working life with a structured term, and you're comfortable with the lender holding title for now rather than buying it outright today. If you definitely want to own the asset outright with the cleanest GST and depreciation story, a chattel mortgage is usually simpler. If you only need the gear for a season or a single job and want zero value risk, an [operating lease](/glossary/operating-lease) is the better tool. As a broker we work across a panel of lenders, so we can line these up side by side against your actual numbers rather than pushing one product. Two quotes with the same monthly figure can be completely different deals once you factor in who carries the residual and how each is taxed. Run the structure past your accountant and let us model the lender options against it. This is genuine business-purpose finance for trade gear, so a business-purpose declaration applies and the deal generally sits outside the consumer CCCFA affordability regime — different rules, different paperwork. ## See also - [Operating lease](/glossary/operating-lease) - [Chattel mortgage](/glossary/chattel-mortgage) - [Plant and equipment finance guide](/guides/plant-and-equipment-finance-guide) Not sure whether a finance lease, a chattel mortgage, or an operating lease fits your next bit of kit? [Book a call](/book-a-call) and we'll talk it through, no pressure.