What Is Equipment Finance? How It Works and What Lenders Check
Asset and Vehicle Finance
How it works · What lenders check · Before you commit · After settlement
A practical Australian guide to choosing equipment finance, understanding what lenders assess, comparing the real cost, avoiding purchase-stage traps and planning what happens after the machine is delivered.
Quick Answer
Equipment finance is business finance used to buy or lease machinery, vehicles and other equipment, usually with the equipment itself providing the lender's security. The lender assesses both the business and the asset, pays the supplier at settlement and structures repayments over a term suited to the equipment.
Also called: equipment loan, business equipment loan, plant and machinery finance, and asset finance for equipment.
How does equipment finance work in Australia?
Equipment finance works by linking the funding to a specific business asset. The financier approves the business and the equipment, pays the supplier or seller at settlement, takes the agreed security over the asset and receives repayments over the finance term.
- Choose the asset. Get a quote or tax invoice in the exact name of the entity that will borrow.
- Choose the structure. Decide whether ownership from day one, regular upgrades or end-of-term flexibility matters most.
- Apply once through the right route. The lender assesses the business, the equipment and the transaction.
- Clear the conditions. Final invoice, identification, insurance, financial information and any valuation or seller checks are completed.
- Settle. The financier normally pays the supplier or seller directly and records its security interest where required.
- Run the asset and repay. Keep the finance documents, invoice, insurance and service records so tax, refinance, sale or payout is easier later.
The broader family of loans for machinery and vehicles is explained in what asset finance is and how it works, while our equipment finance glossary definition gives the short version.
Should you finance this machine at all?
Before comparing lenders, test whether the asset solves a real business problem. Finance makes more sense when the equipment adds capacity, replaces expensive downtime, reduces an existing cost or supports work the business can realistically service; it makes less sense when the purchase is mainly driven by a tax deadline or an optimistic revenue assumption.
- What does the machine change? More jobs, faster output, less hire cost, less downtime or lower labour cost?
- What happens if work slows? The repayment continues even when utilisation falls.
- What cash must stay in the business? Compare the benefit of keeping working capital with the total cost of finance.
- What is the exit? Think about resale, trade-in, balloon, payout and replacement before choosing the original term.
Does financing change when you can claim the equipment for tax?
Financing the equipment does not by itself decide the tax result; ownership structure and the date the asset is first used or installed ready for use matter. From 1 July 2026 the ATO says the $20,000 instant asset write-off is permanent for eligible small businesses with aggregated turnover under $10 million, and the threshold applies per eligible asset. A machine ordered in June but first used in July falls into the next income year. Assets costing $20,000 or more can go into the small business pool, depreciated at 15% in the first income year and 30% each year after that.
The finance structure matters too. Under a chattel mortgage your business owns the equipment from settlement, so financing it does not by itself stop a claim; under a finance lease the financier generally owns the equipment and your business usually claims the lease payments instead.
Source: Australian Taxation Office, $20,000 instant asset write-off, last updated 27 August 2026, read 5 October 2026. General information only; ask your accountant how the rules apply to your business and finance structure.
Which equipment finance option should you use?
Use the structure that matches what you want to happen to the equipment, not just the repayment you are shown. A chattel mortgage suits businesses that want ownership from day one, while a lease or rental can suit equipment that is upgraded frequently.
| What you want | Structure to compare first | Why | What to check |
|---|---|---|---|
| Own the equipment from day one | Chattel mortgage | Your business owns the asset and the financier takes security over it | Rate, fees, term, balloon and early payout |
| Upgrade the equipment on a regular cycle | Finance lease or rental | The financier owns the asset during the term and the contract can be built around use rather than permanent ownership | Return conditions, renewal, end-of-term options and total rental cost |
| Own the equipment after the final instalment | Commercial hire purchase | Ownership generally transfers after the agreement is completed | GST and accounting treatment, term and payout rules |
| Buy different assets repeatedly | Equipment line of credit | One approved limit can support repeated eligible purchases | Limit, availability period, per-draw conditions and fees |
| Need money for more than the equipment | General business loan | The funding is not limited to one identifiable asset | Security, term, cost and whether tying property to the debt is necessary |
For the detailed ownership, GST and end-of-term differences, compare chattel mortgage vs lease vs hire purchase. The mechanics of the most common ownership structure are in how a chattel mortgage works.
Should equipment finance have a balloon?
A balloon lowers the regular repayment by leaving part of the balance to the end, but it does not make that amount disappear. Use a balloon only if the expected resale value, business cash flow or refinance plan gives you a credible way to deal with it when the term ends.
Our guide to balloon payments and residual values explains the trade-off in detail.
What do equipment finance lenders check, and who is easiest to approve?
Equipment finance lenders assess the business, the asset and the transaction together. The easiest files usually combine a business with clean recent conduct, a mainstream asset with a deep resale market and a dealer invoice that exactly matches the borrowing entity.
| What the lender checks | What strengthens the file | What can make it harder |
|---|---|---|
| Business history | Established ABN, relevant industry experience and consistent trading | Very new entity with little evidence of how repayments will be supported |
| Cash flow and conduct | Clean statements and enough cash flow for the new fixed commitment | Recent dishonours, undisclosed tax arrears or unexplained account stress |
| Asset | Recognised make and model, useful life beyond the term and broad resale demand | Very old, specialised, hard-to-value or difficult-to-resell equipment |
| Supplier and invoice | Dealer invoice in the exact borrowing entity's name with clear identifiers | Private seller, mismatched entity name, missing serial number or unclear title |
| Credit file | Limited recent enquiries and explained historical issues | Several fresh applications, unpaid defaults or unexplained adverse credit |
business.gov.au recommends understanding the business's income, expenses, debts, cash flow, affordable repayment and available security before applying for a business loan. Those same questions sit behind equipment finance assessment even though the asset itself provides much of the security.
Source: business.gov.au, Apply for a business loan, last updated 18 February 2026, read 5 October 2026.
How does lender assessment change for an established business, new ABN, sole trader, company or trust?
The lender changes what it relies on when the business has less history or a more complex structure. An established business is assessed mainly on trading conduct and cash flow, while a new ABN relies more heavily on the asset, deposit, owner experience and director position.
| Business position | What the lender usually leans on more | What can strengthen the application |
|---|---|---|
| Established business | Trading history, recent bank conduct, financials where required, existing debts and the asset itself | Stable turnover, clean statements, manageable existing commitments and a mainstream asset |
| New ABN | Asset quality, deposit, industry experience, contracts or work pipeline, director credit and personal asset position | Dealer purchase, deep resale market, relevant experience and clear evidence of how repayments will be supported |
| Sole trader | Business cash flow plus the proprietor's own credit position and existing commitments | Clean business statements, consistent income and a clear separation of business and personal commitments |
| Company or trust | Entity documents, trading evidence, directors or guarantors, related entities and the asset | Correct entity on the invoice, matching ABN and GST details, clean conduct and straightforward ownership |
Can a new ABN get equipment finance?
Yes, but a new business has less trading history for the lender to rely on, so the asset, deposit, owner experience, contracts and personal credit position carry more weight. A mainstream machine from a dealer is usually easier to explain than a specialised private-sale asset.
See our low doc equipment finance guide where full financials are not available.
Can you get equipment finance with bad credit?
Sometimes. The lender looks at what happened, how recent it is, whether it has been fixed and what the rest of the file looks like. A paid historical default with a clear explanation reads differently from recent dishonours or unresolved tax debt.
The OAIC says a consumer credit report can contain credit enquiries, defaults, payment status on recorded defaults, certain court judgments and insolvency information. That is why the timing and explanation of an issue matter.
Source: Office of the Australian Information Commissioner, Information on your credit report, updated 29 July 2025, read 5 October 2026.
Can you get equipment finance with ATO tax debt or a payment plan?
Sometimes. Tax debt does not automatically prevent equipment finance, but the lender will want to understand the balance, whether a payment arrangement is in place, whether repayments are being met and whether the debt is reducing or still growing. Undisclosed tax arrears that first appear in the bank statements are usually harder to explain than a known, documented arrangement.
From the broking seat (indicative, October 2026)
A good equipment file tells one coherent story: the borrower, invoice, asset, purpose, term and repayment capacity all make sense together.
What usually helps:
- A dealer tax invoice in the borrowing entity's exact name
- A machine with a broad resale market
- Clean recent business statements
- A term that finishes inside the asset's useful life
- One well-targeted application rather than several speculative applications
What often stalls the deal:
- The quote is in the wrong entity's name
- The asset or seller changes after approval without the lender being told
- Recent dishonours or tax arrears appear unexpectedly
- The machine is older or more specialised than the term allows
- A deadline was not disclosed until after the application was lodged
Drawn from Switchboard Finance broking practice on business equipment deals, October 2026. Indicative only, not a quote or an offer; lender policy and individual circumstances vary.
How much does equipment finance cost, and what changes the term, deposit and balloon?
The real cost of equipment finance is the total amount paid over the contract, not the advertised rate alone. Compare the amount financed, interest, establishment and account fees, any balloon, early payout costs and any cash discount you give up by taking dealer finance.
- Asset type and age: newer mainstream equipment with a strong resale market generally gives the lender more comfort than old or specialised gear.
- Term: stretching the term lowers the regular repayment but keeps the debt running longer and may not fit an older asset.
- Deposit or trade-in: contributing cash or equity can reduce what is financed and can help on a harder asset or newer business.
- Balloon: lowers the periodic repayment but leaves a lump sum or refinance decision at the end.
- Business and credit profile: the strength of the borrower affects lender choice and pricing.
- Fees and exit terms: establishment, account, documentation, payout and early termination costs can change the true comparison.
For current indicative rate bands and fees, use our dated guide to chattel mortgage rates and fees. To test term and balloon combinations, use the equipment finance repayment calculator.
How should you compare two equipment finance quotes?
Compare the whole transaction, not just the rate or monthly repayment. Two quotes can show similar repayments while financing different purchase prices, carrying different balloons or charging different fees and payout costs.
| Compare this | Why it matters | Question to ask |
|---|---|---|
| Cash purchase price | A dealer-finance offer can look cheap because the equipment price itself is higher | What is the cash price if I do not take your finance? |
| Amount actually financed | Deposit, trade-in, fees or capitalised costs can change the real borrowing amount | Exactly how much principal am I borrowing? |
| Interest rate and total repayments | The rate matters, but total repayments show what the finance costs over the term | What is the total I will pay if I keep the contract to the end? |
| Establishment and account fees | Fees can materially change a low-rate quote | Which fees are upfront, ongoing or added to the loan? |
| Balloon or residual | A lower regular repayment can hide a large amount still owing at the end | What will still be owing after the final scheduled repayment? |
| Early payout | Selling or upgrading before the term ends can trigger extra costs | How is the payout calculated if I exit in year one, two or three? |
| Dealer or broker remuneration | Where remuneration is disclosed, it can help explain how the transaction is structured | Is a commission paid, by whom and does it change my price or contract? |
| 0% finance vs cash discount | Giving up a cash discount can create an implied finance cost even when the stated rate is zero | What cash discount would I receive if I arranged finance separately? |
Is 0% dealer equipment finance really free?
Not necessarily. A zero-rate offer can still cost more if taking it means giving up a lower cash price, accepting a shorter term, paying fees or taking a structure with an unwanted balloon or service package. Ask for the cash price first, then compare the total amount you would pay under each route.
A worked example shows why. A 0% offer on a $100,000 machine over 36 months is not free if the dealer would sell it for $90,000 cash: the $10,000 discount you give up works out at an implied rate of about 6.97% a year.
| Cash price you could negotiate | Discount given up by taking 0% | Repayment on the 0% offer | Implied annual rate of the 0% offer |
|---|---|---|---|
| $95,000 | $5,000 | $2,777.78 a month for 36 months | About 3.36% |
| $92,000 | $8,000 | $2,777.78 a month for 36 months | About 5.49% |
| $90,000 | $10,000 | $2,777.78 a month for 36 months | About 6.97% |
Basis: illustrative arithmetic, October 2026. A $100,000 list price on 0% over 36 monthly repayments in arrears, compared with financing each cash price over the same repayments; GST, fees and balloons left out. Not a quote or an offer.
Our guide to dealer and point-of-sale equipment finance explains the supplier side, and our insight on how a manufacturer finance quote is built shows what to compare.
How do equipment age limits affect the term?
Lenders commonly assess the age the equipment will be when the finance finishes, not only its age today. An older machine can therefore need a shorter term even when its current condition is good. See financing used and aged equipment for the specialist rules.
| Equipment class | Term | Deposit | Age at the end of the term | How much of the price is usually funded | Read more |
|---|---|---|---|---|---|
| Earthmoving and yellow goods | Among the longest | Often nil on new dealer stock; more on older or private machines | The generous end | Often the full invoice on new | earthmoving equipment guide |
| Trucks, trailers and transport | Among the longest on new units | Often nil on new; more as kilometres rise | Generous to middle, kilometres read alongside age | Often the full invoice on new | truck finance guide |
| Manufacturing plant | Long for standard plant; shorter for one-off lines | Often nil on standard plant; more on specialised or imported lines | Middle; tighter for one-off configurations | Less where resale is thin | manufacturing finance hub |
| Medical and imaging | Middle | Often nil for an established practice on new equipment | The tight end | Fit-out assessed separately | medical and allied health hub |
| Hospitality and commercial kitchen | Short to middle | Often nil on new; more on second-hand gear | The tight end | The equipment invoice; fixed fit-out is harder | hospitality equipment guide |
| Office equipment and IT | The shortest, often matched to an upgrade cycle | Usually nil | The tightest; many deals are rentals | Assessed mainly on the business | IT and office equipment guide |
Basis: Switchboard Finance broking practice, October 2026, business deals with an established ABN, GST registration and clean statements. Indicative only, not a quote or an offer; every lender sets its own policy, and a newer business or weaker file moves each cell toward the tight end. Our glossary explains the asset age cap.
Should you use equipment finance, a business loan or cash?
Use equipment finance when you want the asset itself to support the borrowing and you want to preserve working capital. Use a general business loan when the funding need extends beyond the machine, and pay cash when the business can do so without weakening its liquidity or giving up a better use for that money.
| Option | What secures it | Best fit | Main trade-off |
|---|---|---|---|
| Chattel mortgage | The equipment | You want to own a long-life asset and match debt to that asset | Finance costs and the asset is encumbered until payout |
| Lease or rental | The financier owns the asset and records its interest | You expect to upgrade or hand the equipment back | You may never own the asset and end-of-term conditions matter |
| Unsecured business loan | Usually no specific asset, often supported by guarantees | The funding need includes more than one purchase or cost | Assessment relies more heavily on cash flow and credit |
| Property-secured business loan | Real estate | You need a larger or longer facility and property security is appropriate | You are putting property behind a business debt that may only relate to equipment |
| Cash | Nothing | You have surplus liquidity and no stronger use for it | Working capital is tied up in a depreciating asset |
business.gov.au notes that leasing can help budgeting through regular payments but can cost more than buying outright, while buying gives the business ownership of the equipment. Tax and GST treatment depends on the structure and your circumstances, so confirm the treatment with your accountant.
Source: business.gov.au, Leasing or buying vehicles and equipment, read 5 October 2026.
For a deeper cash decision, see finance versus paying cash for business assets.
What should you check before paying a deposit or signing an equipment quote?
Do not treat the equipment purchase and the finance as separate decisions. Before paying a deposit, signing a dealer quote or bidding at auction, confirm that the borrowing entity, asset age, seller, title, lender timing, insurance and finance conditions all fit the proposed deal.
The highest-risk point in many equipment transactions is before settlement: a business can become committed to a non-refundable deposit, auction purchase or expiring supplier order before the lender has finally confirmed the asset and transaction fit policy.
| Before you commit | Why it matters | What to do |
|---|---|---|
| Cash price | Dealer finance can hide the cost in a higher purchase price | Get the cash price and the finance price in writing before comparing offers |
| Borrowing entity | A mismatched invoice can stop settlement | Put the exact company, trust, partnership or sole-trader details on the quote |
| Deposit and finance condition | A non-refundable deposit can be lost if finance or the asset is not approved | Ask whether the purchase is expressly conditional on finance and what happens to the deposit if approval does not proceed |
| Delivery and installation date | It affects business timing and can affect the income year in which tax treatment starts | Confirm the realistic delivery date, especially near 30 June |
| Asset age and identifiers | The lender must be able to identify and value what it is funding | Get make, model, year, serial number or VIN, hours or kilometres and condition |
| Seller and title | Second-hand equipment can have an existing security interest | Complete the required seller checks and PPSR search before paying where appropriate |
| Insurance | Many financiers require evidence of cover before settlement | Arrange cover early and note the financier's interest where required |
| Written terms | You can only compare offers on the same basis if the key terms are in writing | Get the loan amount, repayment, term, early repayment fees and whether a commission is paid and by whom |
| Credit enquiries | Multiple formal applications can leave multiple enquiries | Compare the route first, then lodge the application with the lender that fits the file |
What changes for used, private-sale or auction equipment?
Used, private-sale and auction equipment can be financed, but the lender has more to verify. Age, condition and value matter more on used equipment; private sales add seller and title checks; auctions add a hard payment deadline and often a non-refundable deposit.
The PPSR warns that second-hand goods can still have money owing on them and recommends searching before purchase. Our specialist guide covers used and aged equipment finance, while private-sale machinery finance covers seller and payout mechanics.
Source: Personal Property Securities Register, Protecting your business assets, read 5 October 2026.
What changes for imported equipment?
Imported equipment can create a funding gap before a local equipment lender is ready to settle because the supplier deposit, freight, duty, GST or installation costs can fall due before the asset is in Australia and identifiable. Work out which stage each financier will fund before committing to the overseas order.
See funding imported machinery and equipment for the full transaction sequence.
Will shopping around for equipment finance hurt your credit file?
Shopping around for quotes is different from lodging several formal credit applications. The OAIC says a request for a consumer credit report made in connection with an application, including an application for commercial credit, can be recorded as a credit enquiry with the type and amount of credit sought. Ask whether a quote requires a credit check before submitting details to several providers.
Source: Office of the Australian Information Commissioner, Information on your credit report, updated 29 July 2025, read 5 October 2026.
What protections apply before you sign an equipment finance or rental contract?
For a business, the main legal protection is the unfair contract terms law, and the clauses that cost money are renewal, variation and exit. In August 2022 the Federal Court declared 38 terms in 11 Fuji standard form small business contracts unfair and void, including terms for automatic renewal, unilateral variation and termination payments.
Source: ACCC, 38 contract terms in 11 Fuji small business contracts declared unfair and void, 12 August 2022, read 5 October 2026. Whether a term is unfair is for a court to decide.
Since 9 November 2023 businesses must not propose, use or rely on an unfair term in a standard form contract with a small business, and penalties apply. For a company the maximum, for conduct on or after 28 March 2026, is the greatest of $100 million, three times the benefit obtained, or 30% of adjusted turnover; for an individual it is $2.5 million. A small business for this law is one with fewer than 100 employees or turnover under $10 million.
Source: ACCC, Businesses urged to remove unfair contract terms ahead of law changes, 11 September 2023, read 5 October 2026. Applies to contracts made or renewed, and terms varied, from 9 November 2023. ACCC, Fines and penalties, last updated 23 September 2026, read 6 October 2026, for the $100 million maximum that applies to conduct on or after 28 March 2026.
- Automatic renewal. When does the notice window close, and will you be reminded before it does?
- Unilateral variation. Can the supplier change prices or terms, and can you exit without cost if it does?
- Termination payment. What is the exit figure, in dollars, at each point in the term?
- Payment before delivery. When do payments start, and what happens if the equipment never arrives?
- Bundled service charges. What is the equipment cost on its own, separate from service and usage charges?
Lenders that subscribe to the Australian Finance Industry Association's Finance Industry Code also make specific promises on business-purpose finance. Before you accept a term loan they give you the terms covering the loan amount, repayment, term, any early repayment fees and whether commissions are paid and by whom. After settlement, fees such as late payment or dishonour fees must be reasonable, they use reasonable endeavours to give 30 calendar days' notice before changing key terms, they remind you of the end date where a balance such as a balloon is still owing, and they will generally give a notice to remedy a default before enforcing. Not every financier subscribes, so ask.
Source: Australian Finance Industry Association, Finance Industry Code, Schedule 3: Small Business Finance, read 5 October 2026. Applies only to subscribing finance providers.
Consumer credit law generally does not apply: the National Credit Code covers credit provided wholly or predominantly for personal, domestic or household purposes. ASIC says commercial loans, including loans to small businesses, receive the lowest level of legal protection, while AFCA's published Lending to Small Business Approach explains how it considers small business lending complaints where the lender is an AFCA member. This is general information, not legal advice.
Sources: ASIC, National Credit Code, read 5 October 2026; ASIC, Information Sheet 207, Disputes about commercial loans, read 5 October 2026; AFCA, The AFCA Approach to Lending to Small Business, read 5 October 2026.
What happens from approval to settlement, and what should you do after the equipment arrives?
After approval, the deal still has to match what the lender approved. Final documents, the invoice, seller details, insurance and outstanding conditions are checked before the financier pays the supplier; after settlement, the priorities shift to records, insurance, maintenance, tax, repayment dates and the eventual exit.
- Conditional approval. Read every condition as a checklist. Approval can still depend on the final asset, invoice, financial information, insurance or valuation.
- Final invoice. Confirm the borrower, seller, price, deposit, asset description and identifiers match the approval.
- Finance documents. Sign in the correct borrowing entity and return any remaining evidence.
- Insurance. Put the required cover in place before settlement.
- Settlement. The financier normally pays the supplier or seller directly and records its security interest on the PPSR where required.
- Collection or delivery. Do not assume the equipment can be released until settlement or payment confirmation is complete.
Our guide to equipment finance settlement and PPSR registration follows this stage in detail.
A PPSR registration of 7 years or less costs $6.00 online, and PPSR fees are not subject to GST. Where the borrower is a company, the PPSR timing rules say to register within 20 working days after it signs the security agreement, or more than 6 months before it starts insolvency; a financier claiming purchase money priority over goods that will not be inventory has 15 working days from when the business gets possession. That is why most financiers register at or just before settlement.
Sources: Personal Property Securities Register, Fees for using the PPSR and PPSR timing rules, read 5 October 2026. The 20 working day rule is stated for a company as grantor, not every borrower.
What documents do you need for equipment finance?
A typical file needs identification, ABN and GST details, recent business bank statements and the equipment quote or tax invoice. Depending on the deal, the lender may also ask for BAS, financial statements, tax returns, contracts, an asset valuation, seller identification or evidence of the deposit.
A business without up-to-date full financials may have a low doc asset finance pathway, depending on the lender and file.
What should you do after equipment finance settles?
After settlement, preserve the records that make tax, insurance, resale, refinance and payout easier later. The first week after delivery is the best time to set up the end of the deal properly.
- Keep the tax invoice and finance contract together. Your accountant will need the correct source documents.
- Check the insurance certificate. Make sure the policy continues to meet the contract requirements.
- Confirm the first repayment date, frequency and direct debit account. Make sure the account is funded so the facility does not start with a preventable dishonour.
- Record serial numbers, hours or kilometres and service history. Good asset records support later value, sale and refinance.
- Diary the balloon or end date well before it arrives. Decide whether the likely route is cash payout, refinance, trade-in, substitution or return.
What happens if you later sell, refinance or upgrade the equipment?
Ask for a written payout figure before promising clear title to a buyer or committing to a replacement. A payout can include remaining principal, contract interest, a balloon or residual and early termination costs, and the financier's PPSR registration should be ended once its security interest has finished. The PPSR says registrations should be ended as soon as practicable, generally within 5 business days after the secured party no longer has a security interest, and there is no fee to end one.
Source: Personal Property Securities Register, End a registration, read 5 October 2026.
See what a payout figure includes and transfer, substitution and payout options.
Which guide covers your industry's equipment?
The asset decides the deal, so each industry's equipment has its own guide.
- Earthmoving, cranes and forklifts: earthmoving equipment finance
- Tractors, headers and irrigation: farm equipment finance
- Cafe and restaurant equipment: hospitality equipment finance
- Computers, copiers and software: IT and office equipment finance
- Food trucks, coffee vans and buses: food truck, coffee van and bus finance
- Solar, batteries and EV chargers: solar, battery and EV charger finance
- Trucks and trailers: truck and trailer finance
- Medical and allied health: medical and allied health finance hub
- Manufacturing plant: manufacturing equipment hub
- Building and civil: construction finance hub
Equipment finance works best when the asset, finance structure and business purpose all line up. Decide what the equipment needs to do for the business, choose the structure around ownership and exit, compare total cost rather than rate alone, check the transaction before paying a deposit, lodge one well-targeted application and keep the records you will need when the equipment is later sold, refinanced or upgraded. More guides for owners are in our business owners finance hub.
Key takeaway: the cheapest-looking quote is not automatically the best equipment finance deal; the strongest deal is the one that fits the asset's life, protects working capital, survives the lender's checks and has a clear exit before you sign.Frequently asked questions
Equipment finance is used to buy or lease business assets such as machinery, vehicles, tools, medical equipment, hospitality equipment and office technology without paying the full purchase price upfront. The equipment usually provides the lender's security, so the finance can be matched to the asset's working life.
Not always. A chattel mortgage is a business loan secured over the equipment, while a finance lease or rental is an arrangement where the financier owns the asset during the term. An unsecured business loan is different because it is not tied to a specific machine.
Not always. An established business buying a mainstream new asset from a dealer may be able to finance the full invoice, while a new business, an older machine, a private sale, an unusual asset or a weaker credit file can increase the chance that a deposit is required.
It is usually easier than an unsecured business loan, because the equipment secures the deal, but the lender still checks the asset, its resale market and the business. Mainstream equipment from a dealer, clean bank statements and an invoice that matches the borrowing entity make approval easier, while a very new ABN, unresolved tax debt or recent dishonours make it harder.
Usually yes, but ask the financier for a written payout figure before selling, refinancing or upgrading the equipment. The figure can include remaining principal, interest allowed by the contract, any balloon or residual and an early termination fee, and the financier's PPSR registration should be ended once its security interest has finished.
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