Quick answer
Sale and leaseback lets a business sell a vehicle it already owns to a financier and immediately lease it back. You keep using the vehicle every day, and the sale price lands in your account as working capital. It suits businesses with paid-off or lightly financed utes, vans, trucks or fleets that need cash for growth, tax bills or a slow patch without taking on unsecured debt.
Key points
- You sell an owned vehicle to a financier and lease it back — the keys never leave your hands.
- The sale proceeds become working capital for the business.
- Lenders value the vehicle independently; the amount released depends on that value.
- GST and income tax effects of the sale need your accountant's input before you proceed.
- You need
- A vehicle your business owns
- You get
- Cash from the sale
- You keep
- Daily use of the vehicle
- Watch
- Tax on the sale — ask your accountant
What is a sale and leaseback?
It’s exactly what it sounds like. Your business sells a vehicle it already owns to a financier, and in the same transaction leases it back. Nothing changes in the yard: the same ute goes to the same jobs with the same driver. What changes is the balance sheet — the vehicle becomes a leased asset, and the sale price is now cash in the business account.
Sale and leaseback is the vehicle version of something larger businesses have done with buildings and plant for decades. It works because a financier is happy to own a reliable, saleable asset and earn lease payments on it, while your business would rather have the cash.
Why would a business do it?
The most common reasons we hear:
- Funding growth — a new contract needs another two vans, extra stock or a bigger crew.
- Smoothing a tax bill or a slow season without taking on unsecured debt.
- Paying off more expensive debt, such as an overdraft or merchant cash advance.
- Bought vehicles with cash early on and now want that cash working elsewhere.
- Tidying up a fleet so all vehicles sit under one consistent arrangement.
The appeal is that the security is something you already have. If you’re trading well but cash is tied up in vehicles, it can be a cleaner option than a high-cost short-term loan.
How much can be released?
That depends on the financier’s view of each vehicle’s value, not on what you paid or what you think it’s worth. Lenders typically look at:
| Factor | Why it matters |
|---|---|
| Make, model and age | Determines resale demand and value |
| Kilometres and condition | Heavy use reduces value |
| Modifications and fit-outs | Often valued conservatively |
| Existing finance | Paid out first from the proceeds |
| Number of vehicles | A fleet can be bundled into one facility |
We won’t put a figure on it until we know the vehicles. What we can say is that clean, late-model work vehicles with good service records are what financiers like most.
What about GST and tax?
This is the part to get right before you sign. When a GST-registered business sells a vehicle, the sale may be a taxable supply, and the sale price can create an income tax gain or loss compared with the vehicle’s written-down value in your books. The new lease payments then carry GST and are generally deductible for business use, as explained on our finance lease page.
None of that is a reason not to do it — it just means your accountant needs to see the proposal first. A quick call between your accountant and us usually clears it up.
Sale and leaseback or refinance?
They solve similar problems in different ways:
- Sale and leaseback — the financier owns the vehicle and leases it to you.
- Refinancing — you keep ownership and borrow against the vehicle under a new loan.
If ownership matters to you, refinancing may suit better. If you want predictable lease payments and are comfortable with the financier holding title, sale and leaseback can work well.
For businesses with a larger fleet and property, there’s also the option of a property-backed loan — property-secured funding from $20,000 to $5,000,000 that can sit across the whole fleet.
Illustrative example: a landscaping crew with three paid-off utes
Illustrative only. A landscaping company owns three utes and two trailers outright. It wins a council maintenance contract that needs new mowers and two extra staff before the first payment arrives. Rather than taking a short-term unsecured loan, it sells the three utes to a financier and leases them back over three years. The cash funds the mowers and wages; the crews never miss a day. The company’s accountant reviews the tax position on the sale before settlement.
Questions to ask before you sell and lease back
Sale and leaseback can be a smart move, but it changes the relationship between your business and its vehicles. Before you commit, work through these:
- How long will you keep the vehicles? A lease term should match the useful life you expect, not stretch beyond it.
- What’s the residual at the end? Under a finance-lease style arrangement, you’ll owe it. Know the number.
- What happens if a vehicle is written off? Check how insurance proceeds are applied and whether a gap could remain.
- Can you add or swap vehicles later? Growing fleets value flexibility.
- What does the cash actually fund? Releasing cash for growth that earns more than it costs is very different from funding ongoing losses.
- What’s the total cost over the term compared with keeping the vehicles and using another form of funding?
Which vehicles suit sale and leaseback?
| Usually suits | Usually harder |
|---|---|
| Late-model utes, vans and light trucks | Very old or high-kilometre vehicles |
| Popular makes with strong resale demand | Heavily customised bodies |
| Vehicles with full service records | Vehicles with damage history |
| Clean title, no disputes | Vehicles with unclear ownership |
If your vehicles fall into the harder column, a property-backed loan or unsecured cash-flow funding for trading businesses (typically $5,000 to $500,000, sized on turnover and bank statements) may suit better.
Could your vehicles fund your next move?
If your business owns its work vehicles and needs cash, a sale and leaseback is worth a quick conversation. Tell us about the vehicles — it takes about a minute.
Making the enquiry doesn’t trigger a credit check. Your information isn’t blasted out to a list of lenders; one specialist works on it and calls you. Give us accurate details about each vehicle and any finance still owing so we can tell you straight away whether this, a refinance or another option is the better fit. Start your enquiry.
Frequently asked questions
Can I do a sale and leaseback on a vehicle that still has finance on it?
Sometimes. The existing loan is paid out from the sale proceeds and you receive the balance. If little equity remains, a refinance may be simpler. We can work out which applies once we know the payout figure and the vehicle's value.
How is the vehicle valued?
The financier usually relies on an independent valuation or recognised market data for the make, model, age and kilometres. Modifications and fit-outs may add little value in a lender's eyes.
Is sale and leaseback a sign my business is in trouble?
Not at all. Many healthy businesses use it to fund growth — releasing cash tied up in a fleet to buy stock, hire staff or take on a new contract — rather than borrowing unsecured.
Are there tax consequences?
Selling a vehicle can create a taxable gain or loss compared with its written-down value, and GST may apply to the sale if your business is registered. Your accountant should run the numbers before you sign.