Hire or finance equipment you only need part of the year?

For a machine you use only a few weeks a year, hiring usually costs less. Once you use it often enough that a year of hire charges is more than a year of repayments plus insurance, storage and servicing, financing starts to win. Count your real days of use, multiply by the hire rate, and compare that with the full cost of owning. Peak-season availability can settle it.

Seasonal businesses face this question all the time. A landscaper needs a mini excavator mostly in spring and autumn. A grower needs a second harvester for six weeks. An events company needs a lighting tower and generator every summer weekend. The machine works hard for part of the year and sits still for the rest.

How do you work out the break-even point?

Start with two numbers.

The annual cost of hiring. Multiply the days you’ll actually use the equipment by the full daily cost of hire: the rate, delivery and pick-up, fuel, any damage waiver and the time someone spends collecting it. Be honest about days. Look at last year’s job sheets or invoices, not your memory.

The annual cost of owning. Add up a year of:

• finance repayments;
• insurance;
• registration, if it’s a vehicle or registrable plant;
• servicing and repairs;
• storage, if you’ll need extra space;
• an allowance for wear, tyres, tracks and consumables.

Divide the annual cost of owning by the all-in daily hire cost. The answer is your break-even: the number of days a year you’d need to use the machine for owning to cost the same as hiring. Fewer days than that, hire. More, finance.

What does the comparison look like side by side?

	Hire	Finance and own	Lease or long-term rental
Upfront cost	None or a bond	Possibly a deposit	Usually little or none
Cost when idle	Nothing	Repayments, insurance, storage keep running	Payments keep running
Availability in peak season	Depends on the hire company	Always yours	Yours for the term
Repairs and servicing	Usually the hire company	Your business	Depends on the contract
Can earn money when idle	No	Yes, if you hire it out	Usually not
Tax treatment	Generally a business expense	Usually depreciated, or written off if eligible	Payments generally an expense

business.gov.au’s comparison of leasing or buying vehicles and equipment captures the core trade-off: buying lets you choose exactly what you want and modify it, but you handle all repairs and maintenance; leasing gives regular payments and quicker upgrades, but you “may pay more overall”. Hire is the far end of that scale: you pay only when you use it.

What hidden costs change the answer?

On the hire side:

• Peak-season shortages. If everyone in your district needs a tipper in the same fortnight, availability disappears and rates can rise. A lost day of work can cost more than a week of repayments.
• Travel and turnaround. Collecting and returning equipment eats time.
• Familiarity. Operators are often quicker and safer on a machine they know.

On the owning side:

• Idle months still cost money. Repayments, insurance and storage don’t pause in winter.
• Obsolescence. Some equipment dates quickly.
• Your time. Owning means organising servicing, registration and repairs.

If you’re leaning towards owning, the equipment finance page explains how lenders assess the asset and your trading. If you’d like to test the numbers with someone who does this every day, send a quick enquiry; there’s no credit check at that stage.

Is there a middle road between hiring and buying?

Yes, two of them.

A lease or long-term rental. For equipment you need regularly but would rather not own, a finance or operating lease gives you the asset for a fixed term with predictable payments. It doesn’t solve the idle-months problem, but it avoids the upfront cost and suits gear you’d upgrade on a cycle anyway.

Seasonal repayments. Some lenders will structure repayments around a business’s cash flow, with bigger payments in the busy months and smaller ones in the quiet months. This is common for farm machinery and other seasonal assets. The seasonal business loans page explains how lenders look at businesses with uneven income.

There’s also a third option some owners use: finance it and hire it out. An owned machine that earns hire income in your quiet months can cover part of its own repayments. Check that your insurance and finance contract allow it, and allow for the extra wear.

How does tax affect the decision?

Tax shouldn’t drive the decision, but it can shift the numbers.

Hire charges for business use are generally treated as an expense. Owned equipment is usually depreciated over its effective life. The ATO has confirmed the $20,000 instant asset write-off is permanent for businesses with aggregated turnover under $10 million, claimed in the year the asset is first used or installed ready for use. The ATO’s instant asset write-off guidance adds that it applies to second-hand assets as well as new ones, and that assets costing more go into the small business pool.

A used machine under the threshold, bought and put to work before 30 June, can therefore look quite different on your tax return from a year of hire bills. Ask your accountant to run both.

What if your busy season keeps getting longer?

That’s often the real trigger. A business hires a machine for six weeks a year, then ten, then fourteen, and nobody stops to redo the sums. Growth quietly turns a sensible hire decision into an expensive habit.

Signs it’s time to recheck the numbers:

• You’ve hired the same type of machine more than a handful of times this year.
• You’ve turned down or delayed a job because hire gear wasn’t available.
• Your hire invoices for one item add up to a large share of what it would cost to buy a good used one.
• A new contract or customer will need the equipment on a regular schedule.

Set a reminder to run the break-even test once a year, ideally a couple of months before your busy season, so there’s time to arrange finance and take delivery before the work starts.

An illustrative example

Illustrative only. A landscaping business hires a mini excavator for most of its retaining-wall and drainage jobs. Last year’s invoices show 70 hire days, mostly in spring and autumn. With delivery, fuel and damage waiver, the all-in cost works out to roughly $26k for the year.

A used mini excavator in good condition would cost about $60k. Over a four-year chattel mortgage, the owner estimates a year of repayments, insurance, registration, servicing and trailer storage at around $21k. At 70 days, owning is cheaper. It also solves the bigger problem: twice last spring, no hire machine was available for a week.

The owner finances the excavator, and in winter rents it to a plumbing business down the road for a few weeks, which covers a couple of months of repayments. The landscaping business loan page has more on how landscapers fund growth.

Done the sums and owning comes out ahead? Here’s the next step

If your break-even says it’s time to stop hiring, the next question is what you could finance, and on what kind of repayment pattern. That depends on the machine, your trading and how seasonal your income is.

It’s a one-minute form, and nobody runs a credit check when you first enquire. Your details stay with us rather than being sprayed across a list of lenders, which means no barrage of calls. Someone real, who gets that your year has peaks and troughs, reviews what you’ve sent and rings you. Please fill it in accurately, including what the machine is and roughly how many days a year it works, so the first option we put forward is the right one.

See if you qualify for equipment finance →