A payment terminal and receipt printer on a retail counter

Ends in a decision

Commercial leases for New Zealand businesses.

Where the equipment, the service and sometimes the consumables arrive as one monthly figure. Convenient by design, and the convenience is what makes the terms worth reading.

Last reviewed 8 September 2026

Indicative repayment

Weekly

Disclaimer

$248/week

$1,073 /month $11,509 total interest

Loan amount $40,000

$5,000 $500,000

Loan term 4 years

6 months 5 years

Indicative rate 13.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

The short version

Commercial leases in four lines.

One figure covers several things. Equipment, servicing and often consumables arrive as a single monthly charge, which is genuinely convenient and makes the component prices invisible.
A minimum volume is a fixed cost. Usage-based billing with a monthly minimum is a flat commitment dressed as a variable one, and the minimum is what a quiet month reveals.
The term often outlasts expectations. Bundled agreements commonly run longer than a pure finance facility on the same equipment, and the exit provisions are frequently stricter.
Indicative only. Every band on this page is illustrative. Actual rates, fees and terms come from the supplier or lender after assessment.

What it is

A supply relationship with finance inside it.

The arrangements grouped under this heading vary considerably, and they share a shape. A vendor supplies equipment, maintains it, frequently supplies what it consumes, and charges a periodic amount that covers all of it. Whether the finance sits with the vendor or with a financier behind it is often invisible to the customer, and from the customer’s side it behaves as one relationship.

That bundling is the whole value proposition and it is also the thing to be alert to. When equipment, service and consumables are quoted separately, each can be compared against alternatives. When they arrive as one figure, none of them can, and the effective interest rate on the equipment component is frequently not stated anywhere in the agreement.

None of that makes these arrangements bad. For a business that wants a working machine and not a project, they are frequently the right answer, and the premium over assembling the same thing from parts is the price of not having to. The version that goes wrong is where a business signs a five-year bundled agreement with a monthly minimum it has not tested against a quiet month.

Common term

36 to 60 months

Typical equipment

Office, print, hospitality

Effective rate

Frequently not stated

Ends with

Return or renewal

What to establish

Five questions worth asking before signing.

None of these are adversarial and a reputable supplier will answer all five. The answers are what turn a bundle back into something comparable.

What is the minimum monthly commitment

On a usage-based agreement this is the number that matters, because it is what falls due in a month where the equipment is barely used.

How long does the agreement actually run

Bundled terms frequently run longer than a finance facility on the same equipment would, and automatic renewal provisions are common enough to be worth checking for.

What does the service component cover

Which parts, which labour, what response time, and what is excluded. A service inclusion that excludes the expensive component is not one.

What would this cost unbundled

The equipment financed separately plus a service contract plus consumables bought at market. Sometimes the bundle wins on that comparison and sometimes it does not.

What happens if the business exits early

Bundled agreements frequently carry stricter exit provisions than pure finance, because the supplier priced the whole term. This is the clause most likely to surprise.

Against the alternatives

Bundled, or assembled from parts.

The same working equipment can be arrived at three ways, and they differ on effort as much as on price.

Feature	Commercial lease	Operating lease plus own servicing	Hire purchase plus service contract
Number of agreements	One	Two	Two
Equipment cost visible	Frequently not	Yes	Yes
Owned at the end	No	No	Yes
Effective rate stated	Frequently not	Yes	Yes
Management effort	Lowest	Moderate	Highest
Fits when	A working machine is what is wanted	Servicing is available in-house	The equipment will be kept

The middle and right columns give a business something the left does not, which is the ability to compare each component against the market. Whether that is worth the extra administration depends on the amounts involved and on how much the business values its own time.

Unbundling it

How to work out what the components cost.

A bundled figure can be taken apart approximately, and approximately is enough to know whether it is reasonable. The equipment has a purchase price, which a supplier will usually state if asked. Running that price through a repayment calculation at an indicative asset finance rate over the same term gives what the finance component ought to cost.

Subtracting that from the bundled charge leaves the service and consumables component. Comparing that remainder against what a standalone service contract and market-price consumables would cost gives the answer. Sometimes the bundle is genuinely competitive, because a vendor servicing its own equipment at scale has cost advantages a third party does not. Sometimes it is not.

The point of the exercise is not to grind a supplier down. It is that a business signing a five-year commitment should know roughly what it is paying for each part of it, and a bundle that cannot be taken apart even approximately is one where nobody in the business can answer that question.

Worked scenarios

Two bundled agreements, illustratively.

Illustrative scenarios on stated assumptions, showing the same structure working and not working.

A practice with no in-house maintenance capability

Where the bundle earned its premium

A business takes a five-year bundled agreement on equipment it uses daily and cannot service itself. The charge covers the machine, scheduled servicing, breakdown response and consumables.

On these assumptions unbundling suggests the finance component is roughly what an independent facility would cost, and the service component carries a margin over a standalone contract. That margin is buying guaranteed response and a single relationship, which for a business that would otherwise be sourcing a technician mid-breakdown is worth paying. In this scenario the premium was quantified rather than assumed, which is what made it a decision.

Indicative figures

Term: 60 months
Finance component: Market-comparable
Service component: Carries a margin
What the margin buys: Response, and one relationship

A seasonal business on a usage-based agreement

Where the minimum volume bit

The agreement bills per use with a monthly minimum, which was comfortably below the business’s usage when it was signed in a busy quarter.

Through the off-season the usage falls well under the minimum and the business pays the floor regardless, which is a fixed cost it had understood as a variable one. Nothing in the agreement was hidden and the number was on the first page. What was missing was testing that number against a quiet month rather than the month it was signed in.

Indicative figures

Billing basis: Per use
Monthly minimum: Applies regardless
Signed in: A busy quarter
Test that was missing: A quiet month

Honest assessment

Where a commercial lease fits, and where it does not.

Where it fits

The business wants a working machine rather than a procurement project
Servicing the equipment in-house is not realistic and a contract would be needed anyway
Usage is steady and comfortably above any minimum volume in the agreement
The equipment dates fast enough that ownership at the end has little value
The convenience of one relationship is worth a premium the business has quantified

Where it does not

Usage is seasonal or uncertain and a minimum volume would bite in the quiet months
The equipment is long-lived and the business would be better owning it
The component prices matter and the bundle makes them invisible
The term runs longer than the business can sensibly commit to
An unbundled comparison has not been done, and the amounts are large enough to justify one

The renewal moment

Where these agreements quietly extend themselves.

Bundled agreements frequently end by rolling into a new one on updated equipment rather than by stopping. A supplier approaches before the term expires, offers a newer machine at a similar or slightly higher charge, and a fresh five-year term begins. That is a legitimate offer and it is worth recognising for what it is, which is a new commitment rather than a continuation of an existing one.

Two things are worth checking at that point. The first is whether the current agreement has actually run its full term, because rolling early frequently carries the remaining charges into the new arrangement in a way that is not visible in the monthly figure. The second is whether the equipment genuinely needs replacing, or whether the existing machine would run for another three years perfectly well now that most of its cost has been paid.

The other provision worth reading is automatic renewal. Some agreements continue on their existing terms unless notice is given within a defined window before expiry, and a business that misses that window can find itself committed for a further period it did not intend. Diarising the notice date when the agreement is signed is a small piece of administration that occasionally saves a year of charges.

Test the maths

The equipment component, roughly, in weekly numbers.

Entering the equipment price alone gives an approximation of what the finance component of a bundle should cost. Comparing that against the bundled figure shows what the service and consumables are effectively being charged at. Indicative only, and not a quote or offer of credit.

Indicative repayment

Weekly

Disclaimer

$248/week

$1,073 /month $11,509 total interest

Loan amount $40,000

$5,000 $500,000

Loan term 4 years

6 months 5 years

Indicative rate 13.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

References

Sources

Commerce Commission, Fair Trading Act
Backs the note on what a supplier is obliged to represent accurately in a bundled agreement.
Commerce Commission, business contracts
Context for the contractual terms described, including minimum volumes and exit provisions.
External Reporting Board, NZ IFRS 16 Leases
The accounting standard relevant to how these arrangements are treated by reporting entities.
Inland Revenue, GST
The published source for the GST treatment of lease rentals.

FAQ

Commercial lease in New Zealand, questions answered

What is a commercial lease in this sense?

A bundled arrangement, usually supplied by a vendor rather than a pure financier, covering equipment, servicing and frequently consumables under one agreement and one periodic charge. It is the standard route for office, print and some hospitality and medical equipment in New Zealand.

What is a minimum volume?

A floor on the periodic charge in a usage-based agreement, payable whether or not the equipment is used that much. It converts what looks like a variable cost into a fixed one, and it is the single most important number to establish before signing a usage-based bundle.

Is the interest rate stated?

Frequently not, because the agreement is a supply arrangement rather than a credit contract in form. That is not necessarily improper and it does mean the finance component cannot be compared against a market rate without unbundling it, which is why estimating the equipment component separately is worth doing.

Are these arrangements more expensive?

Commonly, and not always, and the premium buys something real. Assembling the same outcome from a finance facility, a service contract and consumables purchased at market takes effort and carries its own risks. Whether the bundle is worth its premium depends on the amounts involved and on what the business’s time is worth.

What happens at the end of the term?

Typically the equipment is returned or the agreement is renewed, often on updated equipment. Purchase options exist in some agreements and are not the norm. Automatic renewal provisions are common enough that checking for them before signing is worthwhile.

Can a commercial lease be exited early?

It depends entirely on the agreement, and exit provisions in bundled arrangements are frequently stricter than in pure finance, because the supplier priced the whole term including the service and consumables it expected to sell. This is the clause most likely to be a surprise later.

Is servicing genuinely included?

What is included is whatever the agreement says, and the useful questions are which parts, which labour, what response time and what is excluded. A service inclusion that excludes the component most likely to fail is doing less than it appears to.

Who owns the equipment under a commercial lease?

The supplier or the financier behind it, throughout. The business is paying for use and for the services wrapped around it, and ownership does not pass at the end unless the agreement specifically provides for it, which most do not.

What happens if the equipment is faulty?

The service component of the agreement is what covers it, and the response time and exclusions in that component are what decide how quickly it is resolved. That is the practical argument for reading the service terms as carefully as the charge, because on a bundled agreement the service is what the premium is buying.

Do these agreements renew automatically?

Some do, continuing on their existing terms unless notice is given within a defined window before expiry. A business that misses that window can find itself committed for a further period it did not intend, which makes diarising the notice date when the agreement is signed a worthwhile small piece of administration.

How is it treated for tax and accounting?

Ordinarily as a lease, with the business claiming the periodic charge as an expense and the GST claimed as it is invoiced, subject to the accountant’s confirmation. For entities reporting under NZ IFRS 16 the arrangement may need to be brought onto the balance sheet, which depends on its terms and on the reporting framework the business uses.