What is an independent lessor?

An independent runs the full lifecycle of a lease, from sourcing capital to disposing of or re-leasing the asset. You or your broker send a proposal, and the lessor underwrites both the business and the asset, looking at cashflow, the likely residual value and sector risk. The lessor then buys the asset, often from the supplier, and keeps legal title while you have the use of it.

The contract covers the lease payments, maintenance, insurance, return conditions and end-of-term options. During the term the lessor handles billing, collections, repossession if it comes to that, and remarketing. At the end you may be able to buy the asset (under a finance lease), renew, return it, re-lease it or have it sold. Specialist independents add value through sector knowledge and refurbishment and resale channels.

A captive lessor is tied to one manufacturer group, so it is fast and often cheaper for that manufacturer's own equipment thanks to incentives, but its flexibility is limited to the vendor program. Banks offer low pricing to strong-credit borrowers, but with standardised finance options, strict credit criteria, slower decisions and less appetite for residual-heavy deals.

Independents sit between the two. They work across many brands and suppliers, negotiate terms and structures, and are competitive on niche assets and higher-risk customers. The price of that flexibility is that pricing varies widely from one independent to another, so due diligence on the provider matters as much as the lease terms.

Compare the total contract cost rather than the headline lease rate, and ask for a breakdown that models early termination, asset damage and a residual shortfall. The residual setting drives both the payments and your end-of-term exposure, a balloon payment lowers payments but adds a lump sum at maturity, and early termination fees can be steep depending on how they are calculated. Return conditions, fair wear and tear, and documentation and admin fees all change the real cost.

Independents commonly register a security interest on the PPSR, so check what is registered and its priority. Before contracting, look at the lessor's credentials and financial strength, where its finance comes from and whether that can change during the term, its credit policy and turnaround, its repossession and cure procedures, its remarketing capability, and whether it holds any credit licence it needs.

Under AASB 16 the lessor's accounting differs from the lessee's, which affects how the lease appears in each party's financial statements. GST is typically payable on the lease payments or upfront on a purchase, depending on the structure, and input tax credits may be claimable where eligible. Vehicle leases and some novated arrangements can trigger fringe benefits tax if employees use the assets.

The lessor typically claims depreciation, which feeds into its pricing and your tax position, and a sale and leaseback often changes who claims it and can have GST consequences. Where a lease arrangement falls under consumer credit laws, credit licensing and responsible lending obligations apply. Talk to your accountant about how each structure lands for your business.