Equipment Finance Ultimate Guide New Zealand 2025
The definitive guide to equipment finance in New Zealand. Everything you need to know about financing business equipment, from hire purchase to operating leases, tax benefits, and choosing the right structure.
💡 Equipment Finance Facts: Over $8.2 billion in equipment finance is provided annually in NZ, making it the most accessible form of business funding with approval rates exceeding 85% for established businesses.
Complete Guide Contents
Equipment Finance Basics
Tax & Financial Benefits
Industry Applications
Application & Strategy
1. Equipment Finance Overview - The $8.2 Billion Market
Equipment finance is New Zealand's largest alternative lending sector, with $8.2 billion in annual funding helping businesses acquire everything from manufacturing machinery to vehicles, IT equipment, and specialized tools. Unlike traditional business loans, equipment finance uses the equipment itself as security, making it more accessible and often more affordable.
Why Equipment Finance is Different
🔒 Security Advantage
Equipment serves as collateral, reducing lender risk and enabling better rates and higher approval chances.
⚡ Speed & Simplicity
Faster approval than traditional loans - often 3-5 days vs 2-6 weeks for bank business loans.
💰 Tax Efficiency
Multiple tax benefits including depreciation deductions and potential 100% deductible payments.
🏦 Accessibility
85%+ approval rates for established businesses, accessible to companies banks won't finance.
📈 Preserve Cash Flow
Typically requires 0-30% deposit vs 100% cash purchase, preserving working capital.
⚙️ Equipment Focus
Lenders understand equipment values and residuals better than general business assets.
2025 Equipment Finance Market Statistics
📊 Key Market Data
Market Size & Growth:
- • $8.2B annual equipment finance volume
- • 12.5% year-on-year growth (2024)
- • 47,000+ equipment finance agreements annually
- • $174K average equipment finance amount
- • 4.2 years average term length
Popular Equipment Categories:
- • Transport/Vehicles: 34% of market
- • Manufacturing: 23% of market
- • Construction: 18% of market
- • IT/Technology: 12% of market
- • Medical/Healthcare: 8% of market
- • Agriculture: 5% of market
Equipment Finance vs Other Funding Options
| Feature | Equipment Finance | Bank Business Loan | Cash Purchase | Rental/Hire |
|---|---|---|---|---|
| Approval Rate | 85%+ | 47% | 100% (if cash available) | 95% |
| Deposit Required | 0-30% | Often 20-40% | 100% | Usually none |
| Ownership | Yes (with HP) | Yes | Yes | No |
| Tax Benefits | Depreciation + Interest | Depreciation + Interest | Depreciation Only | 100% Deductible |
| Cash Flow Impact | Low monthly cost | Higher monthly cost | High upfront impact | Lowest monthly cost |
| Approval Speed | 3-10 days | 2-6 weeks | Immediate | Same day |
🎯 When Equipment Finance Makes Most Sense
- • You need specific equipment to operate or grow your business
- • Equipment costs $5,000+ and has a useful life of 2+ years
- • You want to preserve cash flow for working capital
- • You can generate revenue/savings exceeding the financing cost
- • You want to claim tax benefits from depreciation
- • Traditional bank financing is unavailable or too slow
2. Complete Guide to Equipment Finance Types
Understanding the different equipment finance structures is crucial for making the right choice. Each type has different tax implications, ownership arrangements, and cost structures. Here's your complete guide to every option available in New Zealand.
Hire Purchase (HP) - The Most Popular Option
🏆 Why 68% Choose Hire Purchase
Hire Purchase is the most popular equipment finance option because it combines ownership benefits with financing flexibility. You gain immediate use of equipment while spreading the cost over time.
✅ Key Advantages:
- • Own the equipment from day one
- • Claim full depreciation for tax purposes
- • Interest payments are tax deductible
- • Fixed monthly payments for budgeting
- • No rental expense - it's an asset purchase
- • Can add equipment to the same agreement
⚠️ Considerations:
- • Responsible for maintenance and insurance
- • Equipment appears on balance sheet
- • Bears residual value risk
- • May require larger deposit than leasing
- • Higher monthly payments than operating lease
💡 HP Structure Options:
Standard HP: Equal monthly payments over term
Balloon HP: Larger final payment reduces monthly costs
Seasonal HP: Payments vary with business seasonality
Step-up HP: Lower initial payments, increasing over time
Operating Lease - Lowest Monthly Payments
📉 Operating Lease Benefits
Operating leases typically offer 20-40% lower monthly payments than hire purchase because you're only paying for the equipment's usage during the lease term, not its full value.
✅ Key Advantages:
- • 100% tax deductible lease payments
- • Lower monthly payments than HP
- • Off-balance-sheet financing
- • No residual value risk
- • Often includes maintenance packages
- • Upgrade options at lease end
⚠️ Considerations:
- • Don't own the equipment
- • No depreciation benefits
- • Return equipment at lease end
- • May have usage restrictions
- • Ongoing commitment - can't sell early
🔄 Operating Lease End Options:
Return: Hand back equipment with no further obligation
Purchase: Buy at predetermined residual value
Extend: Continue lease on new terms
Finance Lease - Best of Both Worlds
⚖️ Finance Lease Structure
Finance leases combine ownership benefits with payment flexibility. You're treated as the owner for tax purposes but the lessor holds legal title until final payment.
✅ Tax Advantages:
- • Claim full depreciation allowances
- • Interest component is tax deductible
- • Principal reduction builds asset value
- • GST benefits on purchase and payments
- • Best of both depreciation and deduction
🏢 Accounting Treatment:
- • Equipment appears on balance sheet
- • Depreciation expense recorded
- • Lease liability shown as debt
- • Interest expense separate from principal
- • Meets most lender covenant requirements
Chattel Mortgage - Ownership Plus Flexibility
🏠 Chattel Mortgage Explained
With a chattel mortgage, you own the equipment outright from purchase, but the lender holds a mortgage over it as security. Popular for vehicles and mobile equipment.
✅ Benefits:
- • Immediate ownership and control
- • Choose your own insurance and maintenance
- • Can modify or upgrade equipment
- • Balloon payment options available
- • Full depreciation and interest deductions
💼 Popular Applications:
- • Commercial vehicles and trucks
- • Construction equipment
- • Agricultural machinery
- • Mobile plant and equipment
- • Specialized professional equipment
Novated Lease - Employee Benefits
👥 Novated Lease for Business Owners
Novated leases allow business owners to salary sacrifice vehicle costs, reducing personal tax liability while providing business use flexibility.
💰 Tax Benefits:
- • Reduce personal taxable income
- • Save 20-45% on vehicle costs
- • FBT may apply but often still beneficial
- • Include running costs in package
⚠️ Requirements:
- • Must be a company employee
- • Salary sacrifice arrangement needed
- • FBT compliance required
- • Personal guarantee usually required
4. Equipment Finance Tax Benefits - Complete Guide
Understanding the tax implications of equipment finance can save your business thousands of dollars annually. The New Zealand tax system provides several advantages for businesses that finance equipment rather than paying cash.
Depreciation Benefits Explained
📉 IRD Depreciation Rates for Common Equipment
The Inland Revenue Department sets depreciation rates for different types of equipment. Higher depreciation rates mean larger tax deductions in early years.
| Equipment Type | Depreciation Rate | Useful Life | Tax Benefit Example* |
|---|---|---|---|
| Motor Vehicles | 30% DV | 5-7 years | $8,400 first year |
| Computer Equipment | 50% DV | 2-4 years | $14,000 first year |
| Manufacturing Machinery | 20% DV | 8-12 years | $5,600 first year |
| Construction Equipment | 25% DV | 6-8 years | $7,000 first year |
| Office Furniture | 18% DV | 10-15 years | $5,040 first year |
| Agricultural Machinery | 22.5% DV | 8-10 years | $6,300 first year |
*Tax benefit calculated on $100,000 equipment at 28% company tax rate
Interest Deduction Benefits
💸 Interest Tax Deductions
All interest paid on equipment finance is fully tax deductible for business use equipment, providing immediate tax relief.
Example: $100K Equipment Finance
- • Equipment cost: $100,000
- • Interest rate: 9.95% p.a.
- • Term: 5 years
- • Total interest: $27,500
- • Tax saving: $7,700 (at 28% rate)
Combined Tax Benefits (Year 1)
- • Depreciation (20% DV): $20,000
- • Interest deduction: $9,500
- • Total deductions: $29,500
- • Tax saving: $8,260 (at 28% rate)
Low-Value Asset Immediate Deduction
⚡ Immediate Write-Off for Small Equipment
Equipment costing under $1,000 (including GST) can be fully deducted in the year of purchase, providing immediate tax relief.
💡 Strategy Tip:
Consider splitting larger equipment purchases into multiple smaller assets where possible. For example, buy individual tools rather than a complete toolkit to maximize immediate deductions.
Tax Structure Comparison
| Finance Type | Depreciation | Interest/Payments | Balance Sheet | Best For |
|---|---|---|---|---|
| Hire Purchase | ✓ Full claim | ✓ Interest only | Asset + Liability | Ownership important |
| Operating Lease | ✗ No claim | ✓ 100% deductible | Off balance sheet | Lower payments |
| Finance Lease | ✓ Full claim | ✓ Interest + Principal | Asset + Liability | Maximum deductions |
| Cash Purchase | ✓ Full claim | ✗ No deduction | Asset only | Strong cash position |
💰 Tax Planning Tips
- • Timing: Purchase equipment before March 31 to maximize first-year depreciation
- • Method: Choose diminishing value over straight-line for higher early deductions
- • Bundling: Consider separate agreements for different depreciation rate equipment
- • Professional Advice: Always consult your accountant for specific tax planning
- • Record Keeping: Maintain detailed records for business use percentage
7. Equipment Finance by Industry - Complete Guide
Different industries have unique equipment needs, financing preferences, and lender requirements. Understanding your industry's specific considerations can help you choose the right equipment finance structure and lender.
Manufacturing & Industrial
🏭 Manufacturing Equipment Finance
Manufacturing represents 23% of the equipment finance market, with high-value machinery and specialized equipment requiring sophisticated financing solutions.
Common Equipment:
- • CNC machines ($50K-$500K)
- • Industrial presses ($25K-$200K)
- • Packaging equipment ($15K-$150K)
- • Quality control systems ($10K-$100K)
- • Conveyors & automation ($20K-$300K)
Financing Preferences:
- • Hire Purchase: 75% of deals
- • Finance Lease: 20% of deals
- • Operating Lease: 5% of deals
- • Average term: 5-7 years
- • Deposit: 10-25% typical
Industry Considerations:
- • High equipment values
- • Strong residual values
- • Technology upgrade cycles
- • Maintenance requirements
- • Production capacity impact
🎯 Manufacturing Finance Tips:
- • Consider staggered delivery to spread cash flow impact
- • Negotiate warranty and maintenance inclusion
- • Plan for technology upgrades in 5-7 year cycles
- • Use IRD 20% depreciation rate for maximum tax benefit
Transport & Logistics
🚛 Transport Equipment Finance
Transport dominates the equipment finance market at 34%, with vehicles and logistics equipment representing the most financed assets in New Zealand.
Vehicle Categories:
- • Light commercial ($25K-$80K)
- • Heavy trucks ($80K-$300K)
- • Trailers & tankers ($15K-$150K)
- • Specialized vehicles ($50K-$500K)
- • Forklifts & handlers ($20K-$100K)
Financing Options:
- • Chattel Mortgage: 45% of deals
- • Hire Purchase: 35% of deals
- • Novated Lease: 15% of deals
- • Operating Lease: 5% of deals
- • Average term: 3-5 years
Key Considerations:
- • High depreciation rates
- • Usage-based wear
- • Fuel efficiency priorities
- • Regulatory compliance
- • Seasonal business patterns
Construction & Infrastructure
🏗️ Construction Equipment Finance
Construction equipment finance makes up 18% of the market, characterized by high-value, specialized machinery with strong residual values.
Major Equipment Types:
- Excavators: $80K-$800K (25% DV depreciation)
- Cranes: $200K-$2M (20% DV depreciation)
- Bulldozers: $150K-$1M (25% DV depreciation)
- Concrete equipment: $50K-$500K (25% DV depreciation)
- Compactors: $20K-$200K (25% DV depreciation)
Financing Strategies:
- Project-based: Align payments with project cash flow
- Seasonal structures: Lower payments in winter months
- Balloon payments: 20-40% final payment common
- Trade-in programs: Upgrade every 3-5 years
- Fleet financing: Multiple equipment agreements
⚠️ Construction Finance Tip: Consider equipment utilization rates when choosing lease vs purchase. High-utilization equipment (>80%) typically favors purchase structures for better long-term economics.
Technology & IT Equipment
💻 IT Equipment Finance
IT equipment represents 12% of the market but is growing rapidly. Technology equipment has unique considerations due to rapid obsolescence and upgrade cycles.
Equipment Categories:
- • Servers & networking ($10K-$200K)
- • Computer systems ($2K-$50K)
- • Software licenses ($5K-$100K)
- • Security systems ($15K-$150K)
- • Telecommunications ($10K-$100K)
Recommended Structures:
- • Operating Lease: 60% of IT deals
- • Finance Lease: 25% of IT deals
- • Hire Purchase: 15% of IT deals
- • Terms: 2-4 years typical
- • Upgrade options essential
💡 IT Finance Strategy: Operating leases work well for IT equipment due to rapid technology changes. The 50% depreciation rate provides excellent tax benefits, but lease payments may be more tax-efficient overall.
Healthcare & Medical
🏥 Medical Equipment Finance
Medical equipment finance (8% of market) involves high-value, specialized equipment with long useful lives and stable residual values.
Equipment Examples:
- • Imaging equipment ($50K-$2M)
- • Dental chairs ($15K-$80K)
- • Surgical equipment ($25K-$500K)
- • Laboratory analyzers ($30K-$300K)
- • Patient monitoring ($10K-$100K)
Financing Characteristics:
- • Longer terms (5-10 years)
- • Lower deposit requirements
- • Seasonal payment options
- • Warranty inclusion important
- • Upgrade/trade programs
Agriculture & Primary Industries
🌾 Agricultural Equipment Finance
Agriculture represents 5% of equipment finance but involves some of the highest-value individual transactions, often exceeding $500K for major machinery.
Major Equipment:
- • Tractors ($50K-$500K)
- • Harvesters ($200K-$800K)
- • Irrigation systems ($25K-$200K)
- • Milking equipment ($50K-$300K)
- • Feed systems ($20K-$150K)
Seasonal Considerations:
- • Seasonal payment structures
- • Cash flow aligned to harvest/sales
- • Weather-related income risks
- • Multi-year payment holidays
- • Commodity price dependencies
Lender Approach:
- • Specialist agricultural lenders
- • Bank rural specialists
- • Manufacturer finance programs
- • Government-backed schemes
- • Co-operative financing
11. Equipment Finance Lender Comparison Guide
Choosing the right equipment finance lender can save thousands in costs and provide better service. Here's your comprehensive guide to New Zealand's equipment finance market.
Top Equipment Finance Lenders
MTF Finance
New Zealand's largest independent equipment finance provider
Key Strengths:
- • Market leader in equipment finance
- • Competitive rates from 7.95%
- • Fast approval process
- • Excellent industry knowledge
- • Flexible structures available
Loan Details:
- Amount: $5K - $2M
- Rate: 7.95% - 15.95%
- Term: 1-7 years
- Deposit: 0-30%
- Approval: 3-5 days
Best For:
- • All types of business equipment
- • Established businesses
- • Large equipment purchases
- • Transport and construction
- • Manufacturing equipment
ANZ Equipment Finance
Major bank with comprehensive equipment finance solutions
Key Strengths:
- • Lowest rates for top-tier customers
- • Full banking relationship benefits
- • Large equipment specialization
- • International equipment capability
- • Relationship pricing available
Loan Details:
- Amount: $25K - $10M
- Rate: 6.95% - 12.95%
- Term: 2-10 years
- Deposit: 10-30%
- Approval: 5-10 days
Best For:
- • Large equipment purchases ($100K+)
- • Existing ANZ customers
- • Strong credit businesses
- • International equipment
- • Complex transactions
Orix Equipment Finance
Japanese-owned specialist with strong vendor programs
Key Strengths:
- • Strong vendor partnerships
- • Technology equipment focus
- • Flexible structures
- • Fast turnaround times
- • End-of-lease options
Loan Details:
- Amount: $2K - $500K
- Rate: 8.95% - 18.95%
- Term: 1-5 years
- Deposit: 0-20%
- Approval: 2-4 days
Best For:
- • IT and technology equipment
- • Office equipment and furniture
- • Vendor-originated transactions
- • Small to medium equipment
- • Operating lease preferences
Custom Fleet
Vehicle and equipment specialist with flexible solutions
Key Strengths:
- • Vehicle financing specialist
- • Novated lease expertise
- • Fleet management services
- • Competitive commercial rates
- • Australia/NZ presence
Loan Details:
- Amount: $15K - $300K
- Rate: 10.95% - 19.95%
- Term: 2-5 years
- Deposit: 0-35%
- Approval: 2-3 days
Best For:
- • Commercial vehicles
- • Fleet requirements
- • Novated leasing
- • Transport businesses
- • Balloon payment structures
Lender Selection Guide
🎯 Matching Lenders to Your Needs
For Best Rates (Strong Credit):
- 1. ANZ Equipment Finance - Lowest rates
- 2. ASB Equipment Finance - Competitive pricing
- 3. MTF Finance - Strong alternatives
- 4. BNZ Equipment Finance - Relationship pricing
For Fast Approval:
- 1. Orix Equipment Finance - 2-4 days
- 2. Custom Fleet - 2-3 days
- 3. MTF Finance - 3-5 days
- 4. FlexiGroup - 1-3 days
For Flexible Structures:
- 1. MTF Finance - Most options
- 2. FlexiGroup - Innovative structures
- 3. Orix - Technology focus
- 4. Silver Chef - Hospitality specialist
For Higher Risk Deals:
- 1. FlexiGroup - Alternative structures
- 2. Oxford Finance - Specialist lender
- 3. Liberty Financial - Non-bank option
- 4. Pepper Money - Flexible criteria
💡 Lender Selection Tips
- • Rate shop carefully: Rates can vary by 3-5% between lenders for the same deal
- • Consider total cost: Look at fees, not just interest rates
- • Relationship value: Use existing banking relationships for better terms
- • Vendor programs: Equipment suppliers often have preferred lender arrangements
- • Service quality: Fast approval and good service can be worth paying slightly more
Ready to Finance Your Equipment?
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