What it is
Equipment finance lets a business acquire an income-producing asset and pay for it over a set term. Instead of draining working capital on a $60,000 machine, you spread the cost across regular repayments. The asset usually acts as security, which is why the process is often quicker and simpler than an unsecured business loan.
| Structure | Who owns the asset | Typical fit |
|---|---|---|
| Chattel mortgage | You, from day one (lender holds a mortgage over it) | Vehicles, machinery, tools you plan to keep |
| Finance lease | The lender, throughout the term | Equipment that dates quickly |
| Rental | The lender | Short-term or technology-heavy needs |
| Hire purchase | Transfers to you at the end | Businesses wanting a structured path to ownership |
We compare the two most common options in detail on our chattel mortgage vs lease page.
The numbers that shape a deal
Four variables do most of the work: the amount financed, the term, the rate, and any balloon (a lump sum due at the end). A longer term lowers each repayment but usually increases the total interest. A balloon lowers repayments further but leaves you with a large payment to refinance, pay or settle at the end.
Rates are set by the lender and vary with the asset, its age, the term and your business profile. Treat any figure you see online as an example, and ask for the comparison rate plus a full list of fees. ASIC's MoneySmart site explains how comparison rates work.
What lenders usually look at
- How long your ABN has been active and the business has traded.
- The asset: type, age, condition and whether it holds its value.
- Your credit history, and that of directors or guarantors.
- Evidence of income, which can range from financial statements to bank statements, depending on the deal size.
No site can promise an outcome, because each lender applies its own criteria.
Tax and accounting
How you treat the asset for tax depends on the structure and your circumstances. The Australian Taxation Office publishes guidance on depreciation and business deductions, and your accountant should confirm what applies to you before you sign.
Common questions
What is equipment finance?
Equipment finance is a way for a business to pay for an asset such as a vehicle, machine or fit-out over time rather than upfront, usually with the equipment itself acting as security for the loan or lease.
Can a sole trader get equipment finance?
Many lenders consider sole traders, but they will look at things like how long you have held an ABN, your trading history and your credit profile. Approval is never guaranteed and depends on the lender.
Do I need a deposit?
It depends on the lender and the asset. Some deals involve a deposit, trade-in or balloon, while others may not. The structure changes the total cost, so compare the full picture.
Is a comparison rate the same as the interest rate?
No. A comparison rate rolls certain fees and charges into a single figure so offers can be compared more fairly, though it is based on set assumptions and may not match your exact deal.