What is equipment finance in Australia
Equipment finance in Australia is a broad category of business finance used to acquire vehicles, machinery, and other business assets. Depending on the structure, your business may own the asset while the lender holds security over it, buy it progressively through hire purchase, or use equipment owned by the financier under a lease. Terms commonly run one to seven years, priced at a fixed rate.
Where your business owns the asset from settlement, that's a secured business loan, priced differently from unsecured working capital because the lender can recover and resell the security. The lease structures work the other way, and the difference shows up in your tax position, not just your rate.
Asset finance covers vehicles, machinery, commercial kitchens, medical devices, and fit-outs. What changes between products isn't what you're buying. It's who owns the asset during the term and what happens at the end.
What equipment can you finance
Lenders generally prefer assets they can clearly identify, value and, where relevant, resell. Eligibility still depends on the lender, the asset type, its age and value, and your borrower profile. New and used equipment both get funded across agricultural, commercial kitchen, medical, and dental categories, but every lender applies its own asset criteria on top.
- Vehicles and transport. Utes, trucks, trailers, forklifts
- Plant and heavy machinery. Excavators, loaders, generators, agricultural equipment
- Fixed and fit-out assets. Commercial kitchens, refrigeration, dental and medical suites, gym equipment
- Technology and office assets. Servers, point-of-sale systems, print and production hardware
What can be harder to finance?
Some assets are harder to fund through standard equipment finance, particularly those with uncertain resale value, highly specialised or custom-built equipment, consumables, inventory, and intangible items such as software licences. A lender may point you to another business loan structure instead, or price the facility to reflect the weaker security.
What are equipment finance rates in Australia
There's no single equipment finance rate in Australia. As of late Aug 2026, one current comparison panel shows advertised starting rates from around 7.49% p.a., with some product ranges extending well above 15%. Your actual rate depends on the asset, your business profile, credit history, term, and lender.
The reason is legal. ASIC's guidance on the National Credit Code states that Part 10 of the Code requires a comparison rate when a credit provider advertises fixed-term credit that is for, or mainly for, personal, domestic, or household purposes. Business borrowing sits outside that. ASIC's INFO 101 puts it plainly: loans to companies aren't subject to the credit legislation, and only loans to natural persons and strata corporations are caught.
So when you fund an excavator through your company, there's no comparison rate, no mandated disclosure of the all-in cost, and no legal obligation on the lender to publish anything. The absence of a mandatory consumer-style comparison rate makes commercial quotes harder to compare directly. Your actual rate is a separate question, and it moves with the asset, your business profile, credit history, term, funding costs, and the individual lender's credit policy.
Why your rate differs from the advertised range
Lenders price the asset before they price you. In rough order of weight:
- Resale depth. Equipment with an established secondary market generally prices sharper than specialised or custom gear, because recovery and resale are more straightforward
- Age. New assets price below used, and rate loadings climb as machines get older
- Asset class. Age limits and loadings differ by category, so a ten-year-old excavator and a ten-year-old CT scanner are treated nothing alike
- Term against useful life. Stretching a term past the working life of the asset raises the lender's exposure and your rate with it
- Your file. Trading history, revenue consistency, and existing commitments. Lenders may review the business's and directors' credit history or credit score depending on the borrower and product
What you pay beyond the interest rate
Fees are where the disclosure gap bites hardest, and they're the part of the quote most founders skim. Not every lender charges every item below, and some advertise AUD $0 monthly account fees while charging elsewhere, so treat this as a checklist rather than a bill. Ask for each one as a dollar figure before you sign.
[Table:1]
The PPSR registration fee is set by government, not by your lender. Registering a security interest currently costs AUD $6 for a term of seven years or less, AUD $25 for seven to 25 years, and AUD $115 with no fixed end date. What appears on your settlement statement can differ, so ask which figure applies and whether anything sits on top of it.
The last three decide what an exit costs you, and they rarely appear on a marketing page. Break costs are the one to press hardest on, because a fixed facility can carry a payout figure that moves with wholesale rates for the whole term, and the only thing you can pin down at signing is the formula.
How do you compare equipment finance quotes
Ask every provider for the same four figures, structured the same way, and compare those.
[Table:2]
The balloon needs one more question attached: not just the amount, but the month it falls due. That date is when you either find the cash, refinance, or sell.
Compare quotes on the same term, the same deposit, and the same balloon. Quotes that differ on structure can't be compared at all, whatever the rates say.
One habit separates founders who get a good deal from founders who get a fast one: negotiate the equipment price and the finance charges as two separate conversations.
How much does a balloon payment really cost
A balloon lowers your monthly payment by deferring part of the principal to the end of the term. You pay interest on that deferred principal the whole way through.
Take AUD $100,000 financed over five years at 8.5% per annum, with monthly repayments. The rate is an assumption for illustration, so substitute your own quoted figure. The arithmetic is what matters.
Illustrative example only. It excludes fees and assumes the quoted 8.5% rate remains applicable under the stated structure.
[Table:3]
Same assumptions as above. Illustrative only, fees excluded.
The 30% balloon saves you AUD $403 a month and costs an extra AUD $5,820 in interest. At the end you owe AUD $30,000 on a five-year-old machine, and you cover the gap if it's worth less than that.
A balloon is a cash flow tool. It earns its place when the monthly relief funds something that generates revenue sooner, and the table above prices what that relief costs.
How long should be the finance term
Term does more damage than the balloon and gets a fraction of the attention. Same AUD $100,000 at 8.5%, no balloon:
[Table:4]
Seven years instead of three halves the monthly payment and costs AUD $19,383 more. Most founders pick the term off the monthly payment. The better anchor is how long the asset earns, weighed against cash flow and the total cost above.
A machine on a seven-year loan with a five-year working life leaves you paying for equipment you've already replaced.
Which equipment finance structure should you choose
Any equipment finance comparison comes down to four structures, and the difference between them is ownership. Everything else follows from that one choice.
Equipment finance comparison at a glance
[Table:5]
GST and income tax treatment depends on the exact contract, your GST registration, business use, and accounting method. Confirm the treatment with your accountant or tax adviser.
On GST, the ATO treats the two ownership structures the same way. For hire purchase agreements entered into on or after 1 July 2012, you can claim the input tax credit up front rather than waiting for each instalment, in the same way as you would if you accounted for GST on a non-cash basis.
That's the same practical position as a chattel mortgage. Under a lease, GST credits generally arise on the lease installments instead. Any advice steering you between hire purchase and a chattel mortgage on GST timing grounds is working from pre-2012 rules.
How to pick, in order
Four questions, answered in this sequence, get you to the structure without a spreadsheet.
- Do you intend to still own this asset at the end of the term? If yes, you're in chattel mortgage or hire purchase territory. If you plan to hand it back and take the next model, look at leases
- How fast does the asset date? Technology and anything with a short replacement cycle suits a lease. Plant with a fifteen-year working life does not
- Is your constraint the monthly payment or the total cost? Balloons and long terms solve the first and worsen the second, and the tables above show by how much
- How does your accountant expect the structure to be treated for GST and income tax? Ownership, depreciation, lease deductions, and any instant asset write-off eligibility can differ by arrangement and by your tax circumstances
Residual-value treatment is contract-specific and worth pricing before you sign. Some finance leases make the lessee liable for a shortfall if the asset sells below its residual, and whether you share in any surplus depends on the agreement.
Where the contract puts the shortfall on you and the surplus with the financier, you're holding the downside on the asset's value without the upside, and that never shows up in the rate. Check the end-of-term and disposal clauses rather than assuming the rate tells the whole story.
Operating leases turn on the return conditions instead: notice periods, condition standards, and hold-over provisions all sit in the contract, so diarise the notice date the day you sign.
How is construction equipment finance in Australia priced?
Construction equipment is commonly funded through asset finance products, but pricing still depends on the machine, brand, age, condition, resale market, borrower profile, and finance structure.
Excavators, loaders, tippers, and telehandlers have deep auction markets and published resale values, and mainstream equipment with an established resale market is generally easier for a lender to value than a highly specialised asset.
Age is the constraint on used assets. Some lenders apply age or useful-life restrictions to used machines and load the rate as the asset gets older, and the limits differ by category.
Two details matter more in construction than elsewhere. If the equipment is being manufactured or paid for in stages, confirm whether the lender can fund progress payments, because a standard one-off equipment settlement may not fit that purchase structure.
And lenders may require the financed asset to remain appropriately insured for the term, with their interest noted on the policy, so check the contract and put the premium in your cost of ownership alongside the repayment.
What does equipment finance do to your cash flow
Approval is not the same as funding. Equipment finance in Australia leaves two costs landing before the asset earns anything, and none of them is the repayment.
The deposit and the GST gap
A deposit comes out of working capital at settlement. So does anything excluded from the amount financed.
The GST is the one people miss. On a GST-inclusive purchase price the GST component is one eleventh, so an AUD $220,000 machine carries AUD $20,000 of it. Where the lender finances the GST-inclusive amount and your business is entitled to claim the input tax credit, you don't pay that AUD $20,000 out of pocket. You borrow it, and you carry the borrowing cost on it until you claim the credit and use it to reduce the debt.
Two questions for your accountant before settlement. Ask when the credit can be claimed under your lodgement cycle and model the cash flow timing against it. And check whether your facility allows additional repayments without break or early payout costs, before you assume the credit should go straight onto the loan.
That second one matters more than it sounds. The refund may not map cleanly to one asset, early repayments can be restricted or priced differently, and what the cash should actually do depends on what else the business is funding that quarter. Managing business cash flow around a large asset purchase is a timing exercise, not a single decision at settlement.
Buying equipment from an overseas supplier
A serious plant is usually imported, and the invoice arrives in USD, EUR, or JPY. For imported equipment, the FX conversion can be a material part of the landed cost, especially on a large invoice.
Compare the FX margin and transfer charges separately from the equipment finance rate, because they're different costs on the same purchase and only one of them shows up in the quote.
Three things worth settling before the deposit goes out:
- Whether the quoted foreign price is fixed or moves with the rate between order and shipment, because on a long lead time that exposure sits with somebody, and the contract decides who
- What margin sits in the conversion, quoted against the mid-market rate, not as a flat "no fees" claim
- Whether the financier funds the foreign invoice directly or funds an Australian dollar amount you've already converted, because the two produce different numbers and only one of them is under your control
Equipment finance decides how you fund the asset. Your payment account decides how the supplier actually gets paid. If the supplier invoices in a foreign currency, compare the lender's funding mechanics against the cost of making the payment itself.
Eligible Australian businesses can hold and pay in supported currencies through an Aspire multi-currency business account, with FX pricing from 0.5% above mid-market rates and international transfers by SWIFT.
Aspire doesn't provide equipment finance, and this sits on the payment side of the transaction rather than the funding side. For a fuller breakdown of routes and costs, see the guide to business money transfer from Australia.
Where should you apply for equipment finance
Three routes, and they differ on documentation, asset appetite, and how the funding sits against the purchase.
1. Banks. Direct lending, often to a business that already banks there. Documentation requirements and eligibility criteria vary by provider, and tend to be heavier than the alternatives.
2. Specialist and non-bank asset financiers. Different asset appetites and documentation pathways, with some assessing bank statements in place of full financial accounts. Turnaround times vary.
3. Vendor or dealer finance. Arranged alongside the equipment sale, which can simplify the process because the purchase and the funding sit with one party. The equipment price and the finance charges are still two separate negotiations, so ask for both.
Compare on total cost, structure, lender access, speed, and terms rather than on the channel label. A bank isn't automatically cheaper and a broker isn't automatically dearer.
Do you need an equipment finance broker?
A broker can be useful when the asset, ownership structure, or borrower profile makes lender selection less straightforward. They see pricing across a panel of lenders from a single application, which matters most when you don't know which lender's credit appetite fits your file.
Five questions before you engage one:
- Which lenders are on the panel
- Whether the broker charges you directly
- How the broker is paid by lenders
- Whether commissions differ between lenders on the panel
- Whether any fees or commission-related amounts affect your early payout figure
For a straightforward asset and a straightforward borrower, direct lender quotes may be enough. For specialised or used assets, or a more complex credit profile, broader lender access is worth more.
Are you eligible for equipment finance
Eligibility varies by lender and by facility, and it's where applications most often fail. Areas a lender may assess include business registration, trading history, financial performance and cash flow, credit history, existing commitments, the asset type and value, and whether the equipment is primarily for business use.
Trading-history requirements in particular differ widely, including between two products at the same lender, so check the criteria for the specific facility rather than assuming a market standard.
What lenders check before approving you
Lenders commonly assess a combination of your ability to service the repayments, trading history, business and director credit information where relevant, existing liabilities, the asset's value, age and useful life, and documentation appropriate to the facility.
Documentation usually means:
- Recent business bank statements
- A written equipment quote or invoice from the supplier
- ABN and entity details, including trust deeds where a trust is borrowing
- ID for every director and guarantor
- Financial statements, BAS, or tax records where requested
What the application takes, step by step
- Get the supplier quote. An indicative quote or conditional approval can often start earlier, but final settlement usually requires detailed asset and supplier information
- Submit and get conditional approval. Some straightforward applications get a decision quickly, while larger, unusual, or full-financials applications take longer
- Satisfy conditions. Inspection or valuation on used equipment, insurance confirmation, and any outstanding financials
- Sign and settle. The financier usually pays the supplier directly and registers its interest on the PPSR
- First repayment. Usually one month after settlement, which is often before the asset has earned anything
Review the default, cross-default, early payout, and security clauses before you sign, not after. Their scope depends on the contract, and if the consequences are material or unclear, get legal advice.
How do you check used equipment before you buy it
Used assets make up a large share of this market, and an AUD $2 search is the cheapest protection available on the whole transaction.
- Search before you settle. An online search of the Personal Property Securities Register costs AUD $2 and can identify registered security interests over the asset or the grantor
- Search on the right identifiers. Registrations can be made against serial-numbered property, against the business granting the interest, or against other collateral classes, so follow the PPSR's guidance for the asset type and run both an asset search and a grantor search where it applies
- Keep the certificate with your contract and invoice, because it's dated evidence of what the register showed on the day you bought
This matters because a registered interest can survive the sale. Buy a machine with a financier's registration still attached and that financier may have a claim on the asset you just paid for. The seller's word that it's paid off isn't the same thing as a clear search certificate.
Making the call
Equipment finance rewards preparation more than it rewards negotiation. You may have more control over the structure you're comparing, meaning the deposit, term, balloon, fees, and exit flexibility, than over a lender's underlying credit pricing.
So do two things before you sign. Ask each lender for the total of repayments as a single figure. And weigh the term against how long the asset earns, alongside cash flow and total borrowing cost.
The equipment is the point. The finance is a means of getting it working sooner than your bank balance would allow, and a quote you understand fully is one you can sign quickly and stop thinking about.
Frequently asked questions
What interest rate should I expect on equipment finance in Australia?
Rates vary significantly by lender, equipment, and borrower profile. As of late Aug 2026, one Australian comparison panel showed advertised equipment finance rates starting around 7.49% p.a., with some listed product ranges extending materially higher. Treat published rates as a guide only and compare personalised quotes on equivalent terms.
What is the difference between a chattel mortgage and a finance lease?
Ownership. With a chattel mortgage, the business generally owns the asset from settlement and the financier takes security over it. Under a finance lease, the financier owns the asset during the term, and the end-of-term options and residual obligations depend on the contract. They can include returning the equipment, extending the lease, or making an offer to purchase.
Can a sole trader get equipment finance?
Yes. Sole traders can be eligible, subject to the lender's credit criteria, business use of the asset, and documentation requirements. Whether a guarantee or additional security is required depends on the lender and the structure.
Borrowing as a natural person rather than through a company can also bring the transaction closer to consumer credit territory, which is why lenders handle business purpose declarations carefully.
Can I finance used equipment?
Yes, with conditions. Age or condition restrictions may apply and vary by asset class, and some lenders require a valuation or inspection before settlement. Run a PPSR search before you commit.
How long does equipment finance approval take in Australia?
Timing varies. Some lenders advertise a decision or approved funds within one business day for eligible customers and asset types, while applications needing full financial assessment, a valuation, or review of an unusual asset take longer. Settlement then depends on inspection, insurance, and how fast the supplier issues a compliant invoice.
What happens at the end of an equipment finance term?
It depends on the structure. Under a chattel mortgage or hire purchase you own the asset outright once the final payment clears, including any balloon. Lease outcomes vary, so check the contract for the residual, return, extension, and purchase option mechanics that apply to your agreement. Read the end-of-term clauses at signing, not at the end of the term.
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