equipment finance 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. This is general information only and not financial advice.
For local buyers, equipment finance australia Buying plant and machinery without upfront cash.
Equipment Finance Australia Explained
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. First, choose the asset and get a quote. You need the purchase price including GST and the supplier or private-sale details. Next, pick a finance structure. Most businesses use a chattel mortgage; a finance lease or rental are alternatives, compared below. Then, apply and supply documents. A lender or broker assesses your business, the asset, and your capacity to repay. After that, 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. Finally, settle and start repaying. The lender pays the supplier, registers a security interest over the asset, and repayments begin, usually monthly. Once the loan and any balloon are paid, the security is released and you own the equipment outright. For more details on how equipment finance works, visit the equipment finance guide.
Comparing 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. A chattel mortgage means you own the asset from day one, while the lender holds security over it until the loan is repaid. You can claim the GST on the purchase price up front if you are registered for GST. At the end of the term, you own the equipment outright. This structure is best suited to core plant you intend to keep. A finance lease means the financier owns the asset during the term. You claim the GST on the lease payments rather than the purchase price. At the end, you can pay the residual value to own the asset or hand it back. This is often used for assets you want to use then decide on. An equipment rental is similar to a lease but is often used for assets you replace often. The financier owns the asset, and you pay for the use of it. At the end, you return the asset, extend the lease, or upgrade. To understand the differences between chattel mortgages and finance leases, see the equipment finance guide.
Costs and Eligibility
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. Loan term commonly runs 1 to 7 years, with 3 to 5 years being 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 or 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 Can Apply
Equipment finance is a business product, so the basics below describe what lenders generally look for. An active ABN is usually required, and some prefer a minimum trading period. GST registration is necessary 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, is needed. The equipment must be used predominantly for the business. An acceptable credit history is also considered, 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 brokers earn their keep, by matching the applicant to a lender whose policy fits. 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 getting the best deal.
- Choose the asset and get a quote. 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.
- Apply and supply documents. A lender or broker assesses your business, the asset, and your capacity to repay.
- Settle and start repaying. The lender pays the supplier, registers a security interest over the asset, and repayments begin, usually monthly.
| Structure | Ownership | GST Treatment | End of Term |
|---|---|---|---|
| Chattel mortgage | You own from day one | Claimable up front | Own outright |
| Finance lease | Financier owns during term | Claimable on payments | Pay residual or hand back |
| Rental | Financier owns | Claimable on payments | Return, extend or upgrade |
Common questions
Who owns the asset? It depends on the structure. With a chattel mortgage, you own the asset from day one. With a finance lease, the financier owns the asset during the term.
Can I claim GST? This depends on your registration status and the finance structure. With a chattel mortgage, you can claim the GST on the purchase price up front if registered. With a lease, you claim the GST on the lease payments.
What is a balloon payment? A balloon is a lump sum owed at the end of the loan term. It lowers your monthly repayments during the term but leaves a larger sum to pay when the loan finishes.
This guide provides general information on equipment finance structures and eligibility in Australia. It is not financial advice.