Term Length
Term Length refers to the number of years you finance a business asset for — typically between 1 and 7 years for Australian Equipment Finance, Vehicle Finance, and Low Doc Asset Finance products.
The term you choose directly affects your repayments, interest costs, eligibility, and structures like Balloon Payments and Residual Values.
Why It Matters
Term length plays a huge role in cashflow planning — especially for industries represented in the Tradie Hub, Truckie Hub, Café Hub, and Whitecoat Hub.
- Shorter terms (1–3 years): higher repayments, lower total interest
- Longer terms (4–7 years): lower repayments, higher total interest
- Long terms work well for expensive assets (trucks, excavators)
- Short terms work well for fast-depreciating tools or vehicles
Choosing the right term is part of structuring a Chattel Mortgage, Hire Purchase, or Finance Lease correctly.
How It Works
- Lenders assess the asset’s working life and resale value.
- You choose between fixed or variable repayments:
- Fixed Rate — predictable
- Variable Rate — may move over time
- You may add a balloon or residual to reduce monthly repayments.
- At the end of the term, your Settlement amount clears the loan.
Term length also influences the lender’s Risk Assessment and impacts approval strength — especially for Low Doc or new ABN applicants.
Common Use Cases
- Matching a truck’s useful life with a 5–7 year term
- Keeping repayments low for a café fitout over 5 years
- Short-term financing for tools or small equipment
- Balancing cashflow with a balloon on a ute or van
Many of these scenarios appear in Switchboard articles such as Fast-Track Asset Finance, Equipment Finance Application Mistakes, and Low Doc Equipment Loans (Easiest Way).
Related Switchboard Resources
For depreciation guidance, see ato.gov.au.