Medical Equipment Finance Terminology

Finance for assets such as Medical Equipment is available in several forms, called facilities. ‘Lease’ is the term used most often, but Finance Leases and Operating Leases are not as popular in the Australian Healthcare Industry as Commercial Hire Purchase and Chattel Mortgage facilities.

Finance Leases are familiar to many as a method of buying a car. Fixed payments are made over a period of time, and at the end of the term, the payment of a ‘balloon’ (a predetermined residual value) concludes the contract and title to the asset is transferred.

Operating Leases are essentially long term rentals where the lender accepts the residual risk position and retains ownership.

Commercial Hire Purchase, also known as CHP, and Chattel Mortgage, also known as Goods Mortgage, facilities are similar to Finance Leases, but title is transferred at the start, so the tax and accounting aspects are different.

A more detailed comparison of all facilities is available on request.