Equipment finance Australia lets a business buy plant and machinery without paying the full price up front. Most assets are funded with a chattel mortgage, where the business owns the equipment from day one and the lender holds security until the loan is repaid. Typical terms run 3 to 5 years, deposits are often optional for business applicants, and a balloon payment can lower monthly repayments. Rates and approval depend on your circumstances.
For most Australian businesses, buying a vehicle, excavator, commercial oven, server rack or factory line is a major spend, and tying up working capital in a single asset can leave cash short when wages, stock and tax bills arrive. Equipment finance australia spreads that cost over the working life of the asset instead. This practical guide walks through how the funding works, the common structures, the numbers worth knowing, and the eligibility basics, so you can compare options with confidence. It is general information only and not financial advice.
If you would rather talk it through, the team at The Loan Phone arranges asset and equipment finance for businesses across Australia and can compare lenders on your behalf.
How equipment finance Australia works
Stripped of jargon, the process is straightforward and broadly the same whether you are funding a single ute or a full production line. A typical arrangement follows these steps.
- Choose the asset and get a quote. New or used, you need the purchase price including GST and the supplier or private-sale details.
- Pick a finance structure. Most businesses use a chattel mortgage; a finance lease or rental are alternatives, compared below.
- Apply and supply documents. A lender or broker assesses your business, the asset, and your capacity to repay.
- Set the term and any balloon. Terms commonly run 1 to 7 years. A balloon, a lump sum owed at the end, lowers the monthly repayment.
- Settle and start repaying. The lender pays the supplier, registers a security interest over the asset, and repayments begin, usually monthly.
- Finish the term. Once the loan and any balloon are paid, the security is released and you own the equipment outright.
Comparing the common finance structures
The structures most often offered by equipment loan specialists are a chattel mortgage, a finance lease and an equipment rental. They differ on ownership, who claims the tax benefits, and what happens at the end of the term.
| Feature | Chattel mortgage | Finance lease | Rental / operating lease |
|---|---|---|---|
| Who owns the asset | You, from day one | The financier during the term | The financier |
| On your balance sheet | Yes, as an owned asset | Usually yes | Often off balance sheet |
| GST on purchase price | Claimable up front (if registered) | GST applies to lease payments | GST applies to rental payments |
| End of term | You own it outright | Pay residual to own, or hand back | Return, extend or upgrade |
| Best suited to | Core plant you intend to keep | Assets you want to use then decide on | Equipment you replace often |
What equipment finance costs: the numbers
Because rates move with the market and with each applicant's profile, this page does not quote a specific rate. The figures below are realistic Australian ranges meant to show the moving parts, not an offer.
- Loan term: commonly 1 to 7 years; 3 to 5 years is typical for most plant and vehicles.
- Deposit: many business applicants finance the full price including GST, so a deposit is often optional rather than required.
- Balloon / residual: often set between 0 and 40 percent of the price. A higher balloon lowers the monthly repayment but leaves a larger sum owing at the end.
- Repayment frequency: monthly is standard, with weekly or quarterly schedules available to match your cash flow.
- Comparison rate: always read the comparison rate, which folds fees into one figure, rather than the headline rate alone.
A low-doc option may suit established ABN holders who cannot easily supply full financial statements, though it usually carries tighter limits. A broker can show how a balloon, a longer term or a low-doc structure changes the repayment before you commit.
Who this applies to: eligibility basics
Equipment finance is a business product, so the basics below describe what lenders generally look for. Meeting them does not guarantee approval, and missing one does not always rule you out.
- An active ABN. Most lenders want the business registered, and some prefer a minimum trading period.
- GST registration if you intend to claim the GST credit on the purchase.
- Evidence of capacity to repay, such as business income, BAS statements or, for low-doc, a declaration.
- A genuine business-use asset. The equipment must be used predominantly for the business.
- An acceptable credit history, though some lenders cater to past blemishes at a different rate.
Sole traders, newer operators and established companies all access this kind of funding, but the structure and rate will differ. This is where the brokers behind equipment finance australia earn their keep, by matching the applicant to a lender whose policy fits.
Broker or bank: which route?
You can approach a bank directly, or use a broker who compares several lenders. A bank only offers its own products. A broker can place the application with the lender most likely to approve it on suitable terms, which matters for specialised assets some mainstream banks treat cautiously. Brokers are usually paid by the lender, so the service is commonly free to the borrower.
Frequently asked questions
Is equipment finance the same as a business loan?
Not quite. A general business loan is unsecured or secured against the business broadly, while equipment finance is secured against the specific asset being bought. Because the asset itself is the security, equipment finance often carries a sharper rate than an unsecured loan of the same size.
Can I finance used or private-sale equipment?
Yes. Used assets and private sales are routinely financed. Lenders consider the age and expected working life of the equipment when setting the term, so very old assets may attract a shorter term.
Where can I check the rules independently?
For neutral, government-backed information on borrowing, fees and comparison rates, see ASIC MoneySmart. For a tailored quote, speak to a licensed finance broker such as the team at The Loan Phone.
Before you sign
Read the full contract, including any balloon obligation, early-termination fees and what happens if cash flow tightens. Ask for the comparison rate, confirm the GST treatment with your accountant, and make sure the repayment schedule matches when your income actually arrives. A good broker will walk you through each of these rather than rushing a signature.
Scope: this page is a general education resource about how equipment finance works for Australian businesses and does not recommend a specific product, lender or rate.