Define the job before choosing the finance
Replacing a machine that supports existing orders is a different decision from buying capacity for work you hope to win. Write down what changes: productive hours, output per hour, outsourced costs, reliability or the services you can offer. Separate confirmed work from an assumption about future demand.
Build a base case and a slower case. Allow for commissioning time, operator availability, servicing and the delay between completing work and collecting payment. A machine can cover its monthly repayment on paper while leaving too little cash for wages, materials or an unexpected repair.
- Replacement: compare keeping and repairing the current asset with replacing it, including downtime.
- Additional capacity: identify the orders or workload that could use the extra capacity and when income would arrive.
- New service: test a smaller commitment, rental or outsourcing while demand is uncertain.
- Expected use: choose a realistic holding period and a separate estimate of the machine's remaining useful life.
Test the billable hours needed to cover entered monthly costs
Separate the price, amount financed and cash you need
Ask for an itemised supplier quote. The advertised price may not be the amount required to deliver a working machine. Record the GST treatment of each item, its payment date, and whether the finance provider will include it in the agreement. Do not assume that software, installation or training is eligible simply because it appears on the same quote.
Use three totals: the purchase and setup budget; the amount the provider actually advances or pays to suppliers; and the amount you must pay from available cash. A deposit reduces borrowing only to the extent it is applied to the financed purchase. Loan fees paid separately need cash; fees added to the loan increase the debt. A trade-in may also have an existing loan payout to clear.
| Budget line | What to establish before committing |
|---|---|
| Equipment and attachments | Exact model, included accessories, total price and whether GST is included. |
| Delivery and commissioning | Freight, installation, site works, power connection and testing; who pays and when. |
| Training and software | Initial training, licences and recurring subscriptions; confirm which costs are funded. |
| Deposit or trade-in | Cash deposit, trade-in value, any debt to discharge and how each affects the amount financed. |
| Finance charges | Establishment, documentation and ongoing fees; which are financed or paid from cash. |
| Operating reserve | Insurance, consumables, maintenance and cash needed before the machine begins earning. |
Swipe or scroll the table sideways to see every column.
For example, an $80,000 equipment purchase with a $10,000 deposit creates a $70,000 loan before any financed extras or fees. If $4,000 of installation is paid separately, the immediate cash requirement becomes $14,000 before other charges. These are hypothetical budget figures, not a statement that any provider will fund a particular item.
Check GST without treating it as available cash
Check whether you are registered for GST, whether the purchase includes GST and how the equipment will be used in the business. Keep the required tax invoice. Private use or use for input-taxed activities can change a GST-credit claim, and a private seller's asking price does not establish that GST is included.
Have your accountant check the actual purchase or lease, business-use share and when any credit can be claimed under your GST accounting method. Keep the settlement cash requirement separate from a possible later BAS credit. Do not subtract an assumed refund from the deposit or payout unless its availability and timing are confirmed.
For a calculator comparison, use a consistent basis for purchase, rent, operating costs and resale. Atlas's equipment comparison does not calculate GST credits, income-tax deductions or depreciation. Do not mix an ex-GST purchase price with GST-inclusive rental payments and describe the result as an after-tax saving.
Compare ownership, use and the end of the agreement
Start with ownership. Under an equipment loan, the business generally purchases the asset and the lender holds security over it. Under a finance lease, the lessor generally owns the equipment during the agreement. Check who holds title, who can sell or modify the asset and what must happen before ownership can transfer.
| Approach | Decision to make | Terms to compare |
|---|---|---|
| Buy with cash | Is ownership worth using this cash now? | Cash left for the business, operating costs, useful life and uncertain resale value. |
| Equipment loan | Does borrowing preserve enough cash to justify the finance cost? | Deposit, security and guarantees, repayment schedule, fees, balloon and early payout. |
| Finance lease | Does the right to use the asset fit the intended holding period? | Lease rentals, residual, maintenance obligations and any end-of-term purchase process and cost. |
| Rental or hire | What flexibility does this specific agreement actually provide? | Minimum commitment, notice, inclusions, usage limits, damage, collection and return charges. |
Swipe or scroll the table sideways to see every column.
Next check the commitment to use it. Stopping work with a machine does not necessarily end lease or rental payments. Record the minimum period, cancellation costs, return conditions and any purchase option. Compare the agreement with the date you realistically expect to replace the equipment.
Check personal guarantees separately from the security over the machine. A guarantee can create obligations for a director or another person alongside the business debt. Identify every borrower, guarantor and security provider, then obtain advice on the actual documents before signing.
Read the equipment loan-versus-lease guide
Compare cash purchase, finance and rental over one use period
Make the term and balloon work with your exit plan
Compare the expected use period with the finance term. If you expect to replace the machine after three years but finance it over five, you need an early-exit calculation as well as a monthly repayment. A lender's payout can include contractual charges that are absent from a standard amortisation schedule.
A balloon leaves principal due at the end. It can lower the regular payment, but the final obligation remains and interest continues to apply to outstanding debt. Set out where the money would come from: cash saved, sale proceeds, or an application for further finance. Future refinancing and a hoped-for resale price are uncertain.
- Ask for the number and timing of payments, whether they are in advance or arrears, and the separate final amount.
- Test a lower sale value and a period without revenue. Check whether you could meet any shortfall.
- For a fixed-rate proposal, request the early-repayment terms and a dated payout quote. Include applicable break costs and discharge charges when comparing an early sale with keeping the equipment.
- For a lease, distinguish a residual and end-of-term purchase terms from a loan balloon. Obtain the amount needed to achieve your intended ownership outcome.
New, used and private-sale equipment need different checks
A lower used-equipment price can be offset by repairs, downtime or a shorter remaining service life. Compare condition and support for the work you need, not just age or advertised price. Provider acceptance of an asset, seller or private sale must be confirmed before making a binding commitment.
| Purchase situation | Evidence and questions |
|---|---|
| New equipment | Final specification, delivery date, commissioning, warranty conditions, local servicing and parts availability. |
| Used equipment | Hours or usage, maintenance history, independent inspection, known defects, remaining useful life and immediate repair budget. |
| Private sale | Correct seller identity and authority to sell, ownership evidence, asset identifiers, GST status, payment and security-release arrangements. |
| A machine already under finance | Who is owed money, the current payout and how any relevant security interest will be dealt with at settlement. |
Swipe or scroll the table sideways to see every column.
Check for existing security interests before paying. Use the PPSR search appropriate to the asset and seller; not every machine can be checked like a vehicle using its serial number. Confirm the required seller details, keep the search result and resolve identified interests before proceeding. A condition inspection and a security check answer different questions.
Budget for maintenance, insurance and downtime
Build an operating-cost list for each option: servicing, repairs, consumables, fuel or power, insurance, storage and transport. Check who is responsible under the agreement and what is actually included in rent or a service package. Add each expense once.
Read the insurance obligations alongside the supplier's delivery date. Confirm when cover must begin, who must be named on the policy, the required cover and any excesses or exclusions. Allow for the premium in the cash budget rather than assuming insurance is included in a finance or rental payment.
A useful downside case combines fewer billable hours with a repair bill or temporary replacement rental. The utilisation tool models monthly cash contribution from the figures you enter; it does not prove demand or calculate the time needed to recover the original investment. Keep operator wages, travel and non-billable time consistent with your hourly assumptions.
Worked example: using an $80,000 machine for three years
This hypothetical example uses the Atlas buy, rent or finance model. It assumes an $80,000 cash price, a $10,000 finance deposit, a $70,000 loan at a constant 9% nominal annual rate, 60 monthly payments in arrears and a $15,000 balloon. The comparison ends at month 36, when owned equipment is assumed sold for $40,000.
Owner operating costs are $400 a month. The rental alternative costs $2,200 a month plus $150 of other operating costs, with no upfront payment, return charge or obligation after month 36 in this simplified model. All amounts use the same cash basis. No tax or GST adjustments are calculated; these are assumptions, not supplier quotes or available finance terms.
| Cash measure | Buy with cash | Finance the purchase | Rent |
|---|---|---|---|
| Upfront cash | $80,000 | $10,000 deposit | $0 assumed |
| Regular monthly cash outflow | $400 operating costs | $1,654.21: repayment plus operating costs | $2,350: rent plus other operating costs |
| Debt to settle after month-36 regular payment | $0 | $39,991.05 mathematical balance | $0 |
| Assumed sale proceeds at month 36 | $40,000 | $40,000 | $0 |
| Net cash cost over 36 months | $54,400 | $69,542.59 | $84,600 |
Swipe or scroll the table sideways to see every column.
The finance repayment alone is $1,254.21 a month. Its total includes the deposit, 36 unrounded repayments, $14,400 operating costs and the remaining balance, less sale proceeds. The $80,000 purchase price is not added again, and the $15,000 future balloon is not charged again on top of the early settlement balance. Displayed figures are rounded to cents after calculation.
Cash purchase has the lowest modelled cost here but needs $80,000 immediately. Finance preserves more starting cash while adding $15,142.59 of interest over the holding period. Rental avoids assumed ownership and resale, but this simplified comparison cannot price contract flexibility or included services.
If resale falls to $35,000, cash purchase costs $59,400 and finance costs $74,542.59; rental remains $84,600 under the unchanged assumptions. In the base finance case, month-36 gross payments are $41,645.26 before the $40,000 sale receipt. The timing matters even though the net outflow that month is only $1,645.26.
The estimated payout excludes break costs, retained interest and discharge fees. The model also excludes finance fees, tax, depreciation, inflation and opportunity cost. Obtain a lender payout and real rental exit terms before treating a planned sale as an available way out.
Turn the comparison into a decision-ready brief
Prepare a one-page explanation of the purchase, the work it supports, the amount of cash you can contribute and the repayment you have tested against business cash flow. Attach the evidence below so an accountant, supplier or finance provider can check the same assumptions. The exact documents required depend on the business, asset and provider.
Before signing, reconcile the quote and agreement: legal borrower, asset description, supplier, deposit, amount financed, rate basis, all fees, payment dates, final obligation, security and guarantees. Confirm the process for supplier payment, delivery, insurance and any existing finance discharge. A planning result or prepared brief is not approval and does not reserve an asset.
What to prepare
- Itemised supplier quote: model, identifiers, price and GST, inclusions, validity and delivery timetable.
- For used or private-sale equipment: seller details, condition and service evidence, inspection and relevant PPSR checks.
- Purchase and setup budget showing the deposit, trade-in debt, financed items and expenses paid from cash.
- Recent business financials and cash-flow forecast, with existing debt repayments and the slower-use scenario visible.
- Evidence for expected productive hours, revenue or cost savings, plus maintenance and insurance estimates.
- Proposed payment schedule, fees, guarantees, security and a plan for a balloon, return or early exit.
- Accountant's review of the actual structure, GST timing and business-use assumptions.
Common questions
What equipment can be financed?
Start with the specific asset: its model, cost, seller, condition and intended business use. Ask whether the proposal can include attached software, installation or other costs, and identify anything you must pay separately. Acceptance depends on the asset and the provider's assessment.
Is a deposit always required?
Requirements vary by provider and proposal. Model both the requested deposit and all separately paid costs. A smaller deposit preserves initial cash but, for the same purchase and other terms, leaves more principal to repay. Check the complete upfront cash requirement before committing to the purchase.
Can I finance used equipment bought privately?
Confirm the specific sale with the provider before committing. Prepare the seller's identity, asset details, condition evidence and payment arrangements, and follow the relevant PPSR guidance. Neither a private sale nor a clean-looking machine establishes that the asset is free of another party's security interest.
Does a lease become mine after the final rental?
Do not assume ownership transfers automatically. Check the end-of-term options, any purchase process and price, residual obligations, notice requirements and return costs in the actual agreement. A loan balloon and a lease residual are not interchangeable instructions to the borrower.
Is the balloon guaranteed to match resale value?
No resale guarantee is assumed in Atlas's calculations. Test a lower sale value and the cash needed to meet any shortfall. If a proposal includes a separate guaranteed buyback, check its conditions, the responsible party and any usage or condition limits in writing.
Can I claim the GST straight away?
A purchase price or finance approval does not establish your credit entitlement or timing. Confirm the GST charged, valid documentation, eligible business use and accounting treatment with your accountant. Keep any anticipated BAS credit separate from cash already available to settle the purchase.
Why can a low repayment produce a higher overall cost?
A longer term or larger balloon can reduce regular payments while leaving debt outstanding for longer. Fees, operating costs and the final payment also affect the cash you need. Compare a shared use period and include any debt settlement or rental obligations remaining at its end.
General information only. Product terms and availability vary. Check the actual proposal and obtain advice appropriate to your circumstances.