Both buying and leasing can be financially sound depending on your goals, cash flow, and how fast your industry evolves. Let’s explore the key differences to help you make the smartest decision for your business.
What Kind of Equipment Are We Talking About?
Most businesses require some combination of:
- Machinery and tools
- Office furniture and fixtures
- IT and computer equipment
- Appliances or specialized devices
You don’t necessarily need to stick to one approach. Many companies find success using a hybrid strategy, leasing short-term or fast-depreciating equipment (like technology) and purchasing assets that hold long-term value (like heavy machinery).
Leasing vs Buying: Key Differences
Cost
Leasing: Offers predictable, regular payments that make budgeting simpler, but the total cost may end up being higher over time compared to purchasing outright.
Buying: Paying upfront or through a loan can result in greater long-term savings. However, it requires more capital initially, which may limit your purchasing power or affect cash flow.
Choice & Flexibility
Leasing: Provides flexibility to try new or upgraded equipment without long-term commitment. The downside? Your choices may be limited to what the leasing company offers.
Buying: Gives you complete control, you can choose any brand, make modifications, and customise the equipment to suit your exact business needs.
Upgrades
Leasing: Ideal for industries where technology changes rapidly. You can upgrade easily at the end of the lease term and always stay current with the latest models.
Buying: While owning means long-term use, staying up-to-date can be challenging, especially if the resale value of your equipment drops quickly.
Tax Deductions
Leasing: Lease payments are tax-deductible if the equipment is used for business purposes.
Buying: You may be eligible to claim depreciation or asset write-offs, providing potential tax benefits over time. Always check with your accountant to determine the best strategy for your business.
Repairs & Maintenance
Leasing: Repairs and maintenance are often included in the lease terms, which can save time and money. However, you may need to follow specific service conditions or face delays if the leasing company manages repairs.
Buying: You have full control over maintenance decisions and schedules. While this allows faster response times, it also means you bear the full cost once warranties expire.
If You No Longer Need the Equipment
Leasing: Early termination of a lease can be costly. You may still need to pay for the remaining term and have no option to sell the asset.
Buying: Ownership gives you the freedom to sell or trade in the equipment when it’s no longer needed, helping recover part of your investment.
Quick Comparison: Pros and Cons
| Leasing | Buying |
| ✔ Predictable payments for easy budgeting | ✔ Full ownership and long-term control |
| ✔ Easier to upgrade to newer models | ✔ Freedom to modify or customize |
| ✔ Repairs may be covered under lease | ✔ Can sell equipment when no longer needed |
| ✔ Tax deductions on the business portion | ✔ Potential long-term savings and tax benefits |
| ✖ No ownership or resale value | ✖ Higher upfront costs |
| ✖ Limited equipment choices | ✖ Responsible for all repairs and maintenance |
| ✖ May cost more in the long run | ✖ Equipment may become outdated |
| ✖ Bound by lease terms even if unused | ✖ May require loans or financing |
There’s no one-size-fits-all answer when it comes to leasing vs buying business equipment. Many business owners use a mixed approach, leasing fast-depreciating assets like technology, and buying durable equipment that retains long-term value.
Before deciding, consider:
- Your current and projected cash flow
- How quickly your equipment becomes outdated
- Your need for flexibility versus control
- Your capacity to manage repairs and maintenance
Let’s Chat: Your Equipment Strategy Starts Here
Not sure whether leasing or buying is right for your business? You don’t have to figure it out on your own.
At Business Genie, we help business owners make confident, strategic decisions that support growth and sustainability.
Book a free 30-minute consultation today and discover the best approach for your equipment investment.
Inspiration for the blog: Leasing or buying vehicles and equipment | business.gov.au
