How do I calculate repayments on a tradie equipment loan?

Monthly repayment = P × [r(1+r)^n] ÷ [(1+r)^n – 1], where P = loan amount, r = monthly interest rate, n = number of months. For example, $30,000 at 8.5% over 5 years = $615/month.

Should I buy or finance equipment as a NZ tradie?

Finance preserves cash flow and keeps capital working in the business. If equipment earns more than its finance cost, borrowing makes sense. If your business can buy outright without straining cash, that eliminates interest cost.

Can I claim equipment loan repayments as a tax deduction in NZ?

You can claim the interest portion of loan repayments as a deduction, but not the principal. You also claim depreciation on the asset separately based on IRD depreciation rates.

What is a balloon payment on equipment finance?

A balloon payment is a large lump sum due at the end of the loan term. It lowers monthly repayments during the loan but requires you to pay out, refinance, or return the asset at the end.

NZ Equipment Finance & Loan Calculator for Tradies

Calculate weekly repayments, total interest and true cost of financing tools, vehicles or equipment for your NZ tradie business.

Financing Tools and Equipment for NZ Tradies

Most tradespeople finance at least some of their equipment — a work ute, a new compressor, or a set of power tools. Understanding the true cost of that finance helps you make better purchasing decisions.

Types of Equipment Finance in NZ

Hire purchase — you own the asset from day one. Interest and depreciation are both deductible. Most common for tools and plant.

Finance lease — you don't own the asset; you lease it for an agreed term with a balloon payment at the end. The lease payments are fully deductible. Common for vehicles.

Chattel mortgage — similar to hire purchase, but the lender holds a mortgage over the asset. Common for larger equipment.

Personal loan / overdraft — higher interest rate, but more flexibility. Generally only suitable for smaller purchases.

NZ Lenders for Trade Equipment

Heartland Bank — popular for trade vehicles and equipment
UDC Finance — vehicle and equipment specialists
HSBC / BNZ / ANZ — business loans, better rates for established businesses
Dealer finance — convenient but often higher rates; always compare

The Investment Boost Deduction

From 22 August 2023, the NZ government introduced the Investment Boost deduction — an immediate 20% tax deduction on the cost of new assets (on top of normal depreciation) for the first year. This significantly improves the after-tax cost of new equipment purchases. See our Investment Boost article for details.

Should You Buy or Finance?

If your cash flow is tight, financing spreads the cost but adds interest. If you have the cash, buying outright is cheaper overall. The break-even point is usually where the after-tax interest cost exceeds the return you could earn on that cash in your business.