What Is Business Asset Finance? How It Works in Australia
Asset and Vehicle Finance
What counts, who lends, how brokers are paid and where the protections stop
A plain guide to business asset finance in Australia: what counts and what does not, how a deal runs from quote to PPSR, who lends, how big the market is, how brokers are paid and which protections apply.
Quick Answer
Business asset finance is borrowing or leasing to get a vehicle, machine or equipment your business uses, with that asset as the lender's main security. You repay it from trading income over the asset's working life, and the structure decides who owns the asset.
Also called: asset finance, equipment finance, vehicle and equipment finance, and asset-backed business lending (not the same as asset-based lending, which borrows against receivables or stock you already hold).
What is business asset finance?
Business asset finance is a loan or lease that lets a business buy or use a vehicle, machine or piece of equipment, with that asset as the lender's main security. The finance industry's own code puts the most common form plainly: "an equipment loan is a type of secured business loan where security is taken over the asset or equipment you are using the loan to purchase".
Source: Australian Finance Industry Association, Finance Industry Code of Practice, Schedule 3: Small Business Finance, clause 3.6, in force from 1 October 2026, read 2 October 2026. An industry code that binds participating members only.Because the asset carries much of the risk, the lender looks at what the asset is, how old it is, who is selling it and how easily it would resell, then at whether the business can meet the repayments. The finance is used wholly or predominantly for a business purpose, which is what moves it outside most consumer credit law; the section on where the protections stop sets out what still applies. Our glossary has a one-line definition of asset finance in plain terms.
What assets can a business finance?
A business can usually finance any asset that can be identified, valued and resold: utes, vans, cars and trucks; trailers; earthmoving, farm and construction machinery; manufacturing and workshop plant; medical, dental and hospitality equipment; and technology such as servers and point-of-sale systems. Assets that are hard to identify or resell, such as fit-outs, software and unserialised second-hand goods, are harder to finance on the asset alone and are often written as a secured or unsecured business loan instead (broker-desk observation, October 2026).
How is asset finance different from asset-based lending?
Asset finance lends against the specific asset you are buying, while asset-based lending lends against assets the business already holds, such as receivables, stock and plant, usually as a working capital facility. In private credit the term stretches further again: EY describes asset-based finance as lending that "targets assets as opposed to operating companies", including loans secured by real estate, equipment pools and receivables.
Source: EY-Parthenon, 2026 Australian Private Debt Market Overview, published 25 March 2026, page 6, read 2 October 2026.This table sorts the products that get called asset finance, and the ones that only look like it.
| Product | What secures it | Is it business asset finance? | Who owns the asset during the term |
|---|---|---|---|
| Equipment loan or chattel mortgage | The vehicle or equipment being bought, registered on the PPSR | Yes, the most common form | Your business, from settlement |
| Commercial hire purchase | The financier's ownership of the asset | Yes | The financier, until the final payment |
| Finance lease | The financier's ownership of the asset | Yes | The financier |
| Operating lease or rental | The financier's ownership of the asset | Yes, at the rental end of the range | The financier |
| Novated lease | A three-way agreement with an employer, through salary packaging | No, it is an employee benefit, not business borrowing | The financier |
| Asset-based lending | Receivables, stock and plant the business already holds | No, it is a working capital facility | Your business |
| Invoice finance | Unpaid customer invoices | No, it funds receivables, not an asset purchase | Not applicable |
| Unsecured business loan | No specific asset; often a personal guarantee | No, even when the money buys equipment | Your business |
Sources: Australian Finance Industry Association, Finance Industry Code of Practice, Schedule 3, clauses 3.5 to 3.10, 3.32 to 3.36 and 3.39 to 3.40, in force from 1 October 2026, read 2 October 2026; EY-Parthenon, Australian Private Debt Market Overview (PDF), 25 March 2026, read 2 October 2026.
How does business asset finance work for vehicles, equipment and trucks?
It works the same way for vehicles, equipment and trucks: you choose the asset, the lender assesses the asset and your business, you sign a business-purpose contract, the lender pays the seller and registers its interest, and you repay over a set term. What changes between asset classes is lender appetite for the asset's age, the term and the deposit, so each class has its own guide:
- The structure most deals use: how a chattel mortgage works, from security to balloon.
- Machinery and plant: equipment finance for machinery and plant, including approval.
- Utes, vans and cars: business vehicle finance for utes and vans.
- Prime movers, rigids and trailers: truck finance for owner-drivers and fleets.
What happens from quote to settlement?
Six steps take a business from a quote to a financed asset:
- Quote. The dealer, manufacturer or private seller gives you a quote or tax invoice naming the asset.
- Application. The lender tells you what it needs to assess the application, usually your ABN, identification and either financial statements or alternative documents (broker-desk observation, October 2026), and may ask you to sign a business purpose declaration confirming the credit is wholly or predominantly for business use.
- Terms. Before you accept, a lender bound by the industry code gives you terms showing the loan amount, repayment, term, any early repayment fees and whether commissions may be paid, and by whom.
- Settlement. The lender pays the seller and you take delivery.
- Registration. The lender records its security interest on the Personal Property Securities Register; under the industry code, "All security agreements must be registered" there. Our glossary explains what the PPSR records.
- Repayments. You repay over the term, usually monthly, sometimes shaped around seasonal cash flow, with an optional balloon payment at the end.
A sole trader civil contractor has a dealer quote for a compact excavator. The lender looks at the machine (new, dealer-sold, easy to resell) and the business (trading history, BAS and tax returns), and the contract is signed in the business's name for business use. The dealer is paid at settlement, the lender registers on the PPSR the same week, and the machine goes to work while the repayments run from trading income. Having the tradie loan pack ready before the quote expires is what keeps that timeline short.
Which guide covers structure, tax and cost?
Each of these decisions has its own home, so this guide gives one line each:
- Structure: whether to own, lease or rent is compared in chattel mortgage vs lease vs hire purchase.
- GST and tax by structure: when the GST comes back and what you deduct are set out in GST timing under each structure.
- Rates and fees: a dated rate band and the fees on top are in chattel mortgage rates and fees.
- Hire purchase: the mechanics, GST and tax of buying by instalments are in how commercial hire purchase works.
- Instant asset write-off: the $20,000 write-off is now law and permanent from 1 July 2026, for businesses with aggregated turnover under $10 million, per asset costing less than $20,000 (Australian Taxation Office, $20,000 instant asset write-off, updated 27 August 2026, read 2 October 2026).
Who lends business asset finance in Australia?
Business asset finance comes from four kinds of lender: banks, non-bank asset financiers, the finance arms of vehicle and equipment makers, and, for larger and mid-sized businesses, private credit funds. The Reserve Bank describes non-bank lenders as focused on "borrower segments requiring more complex financing needs or credit assessments", meaning they "often complement rather than compete directly with banks".
Source: Reserve Bank of Australia, Financial Stability Review, October 2026, chapter 3, published 1 October 2026, read 2 October 2026.| Lender type | Where it usually fits | Evidence and date |
|---|---|---|
| Banks | Established businesses with full financials, buying newer assets from dealers | Broker-desk observation, October 2026; banks that adopt the Banking Code of Practice give its small business protections |
| Non-bank asset financiers | Files that need a more complex assessment: newer ABNs, alternative documents, older or private-sale assets | RBA Financial Stability Review, October 2026 (borrower segments); broker-desk observation, October 2026 (file types) |
| Manufacturer and dealer finance arms | Buyers of that maker's vehicles or machines, at the point of sale | Broker-desk observation, October 2026; the industry code counts vehicle and equipment financiers among its members |
| Private credit funds | Typically "larger and mid-sized businesses and commercial real estate projects" | RBA Financial Stability Review, October 2026 |
Sources: Reserve Bank of Australia, Financial Stability Review, October 2026, published 1 October 2026, read 2 October 2026; Australian Finance Industry Association, Finance Industry Code of Practice, published 16 September 2025, in force from 1 October 2026, read 2 October 2026. Lender types only; no lender is named or ranked.
What each lender type tends to want (broker-desk observation, October 2026)
- Banks: two years of financials, clean credit and a newer asset from a dealer, with the business often banking with them already.
- Non-bank asset financiers: alternative documents such as BAS and bank statements, newer ABNs, and older or private-sale assets, usually at a higher price than a bank charges a full doc file.
- Manufacturer and dealer finance arms: new stock of their own brand, with pricing tied to the sale rather than to your wider banking.
- A file one lender type declines is often a fit for another, which is why the lender is chosen after the file is read, not before.
General information from practice, not a recommendation and not a prediction of what any lender will offer your business.
Matching the file to the lender type is the part a broker changes. You can see how non-bank lender policies compare on documents, ABN age and asset age, and the low doc asset finance guide covers files without full financials.
How do non-bank asset financiers get their money?
Non-bank lenders are prohibited from funding themselves by taking deposits, the Reserve Bank notes, so they borrow the money they lend; for those that securitise their loans, a 2024 RBA speech put it this way: "Securitisers' funding comes mostly through warehouse facilities during the loan origination phase, and then from the securitisation market once loans are packaged and sold to investors." When rates rose, that model had "a larger impact on the funding costs of non-banks compared with banks", so non-bank pricing can reflect funding markets as well as the cash rate. Our glossary covers what makes a lender a non-bank.
Sources: Reserve Bank of Australia, Financial Stability Review, October 2026, chapter 3; RBA, speech by David Jacobs, 2 December 2024; RBA Bulletin, Financial stability risks from non-bank financial intermediation in Australia, April 2024. Both read 2 October 2026.How big is the business asset finance market in Australia?
No official series counts all of it, but businesses took on $3.25 billion of new finance lease commitments in the June quarter 2026, seasonally adjusted, $2.94 billion of it to buy plant and equipment, including $821 million for road vehicles. Chattel mortgages and hire purchase are not published as their own series: the ABS splits fixed term business loans by construction and property purchase, so an equipment loan sits inside a broader total.
| Measure | Figure | Period and basis | Source |
|---|---|---|---|
| New finance lease commitments, businesses, all purposes | $3,253.3 million | June quarter 2026, seasonally adjusted, includes refinancing | ABS Lending Indicators, Table 28, released 14 August 2026 |
| of which plant and equipment, including road vehicles | $2,943.2 million | June quarter 2026, seasonally adjusted | ABS Lending Indicators, Table 28 |
| of which road vehicles | $821.3 million | June quarter 2026, seasonally adjusted | ABS Lending Indicators, Table 28 |
| New finance lease commitments a year earlier | $3,207.2 million | June quarter 2025, seasonally adjusted | ABS Lending Indicators, Table 28 |
| Australian private credit assets under management | A$234.5 billion | 2025, all private credit, not asset finance alone | EY-Parthenon, 25 March 2026 |
| Growth of private credit vs commercial bank lending | 21.0% vs 5.5% a year | Compound annual growth, 2015 to 2025 | EY-Parthenon, 25 March 2026 |
| Non-bank lenders' share of financial system assets | Around 6% | As at October 2026, all non-bank lending | RBA Financial Stability Review, October 2026 |
Sources: Australian Bureau of Statistics, Lending Indicators, June Quarter 2026, Table 28 (finance leases by purpose), released 14 August 2026, read 2 October 2026; EY-Parthenon, 2026 Australian Private Debt Market Overview, pages 6 and 7, published 25 March 2026, read 2 October 2026; Reserve Bank of Australia, Financial Stability Review, October 2026, chapter 3, read 2 October 2026. The ABS finance lease series covers one structure only and is a floor, not a market total.
Where is business asset finance heading?
Into late 2026, credit stays available but demand is expected to ease, and transport is the sector to watch. The Reserve Bank's October review found business credit growth and lending competition "remains strong across banks and non-banks", but lender liaison suggests "credit demand is expected to ease", and most lenders had not materially changed their willingness to supply business credit "outside of some small reductions in appetite for new lending to the transport industry, given its direct exposure to higher energy prices". The Reserve Bank raised the cash rate on 29 September 2026; what that does to pricing is in our guide to how an RBA rise moves chattel mortgage rates. From 1 October 2026, non-bank and specialist lenders that sign up to the industry's new code are publicly accountable under it, which adds a layer to the protections on business asset finance. If you run trucks, the transport signal matters most; the truck guide sets out how truck lenders assess a file.
Sources: Reserve Bank of Australia, Financial Stability Review, October 2026, chapter 2; RBA, Monetary Policy Decision 2026-27, 29 September 2026; Australian Finance Industry Association, Finance Industry Steps Up as New AFIA Code Takes Effect, 1 October 2026. All read 2 October 2026.How are asset finance brokers paid?
Asset finance brokers are usually paid a commission by the lender when the finance settles, and some also charge a brokerage fee that is added to the loan or paid by you, so what matters is what is disclosed to you and when (broker-desk observation, October 2026). Published lender terms we read on 2 October 2026 build the commission into the contract rate and recover the unearned part on early payout; the rates guide shows how commission sits inside a chattel mortgage rate with a published lender example.
What must a broker disclose about commission?
For business asset finance, the disclosure rules come mainly from industry codes rather than the consumer credit law. The Mortgage and Finance Association of Australia's code, which covers small business customers with fewer than 100 people and credit "including lease finance, hire purchase ... irrespective of whether that credit is regulated by the National Credit Code", requires two things:
- Commission, before you proceed: if a commission or other benefit will or may be paid, the broker must disclose who pays it, who receives it, and the amount, or the basis or formula if the amount is not yet known (clause 6.13).
- Any fee, in writing: a broker who charges you a fee must state in writing what it is for, the amount, and when it is payable (clause 6.2).
On the lender side, the industry code says that for a small business customer the lender's terms, term sheet or contract documents "will refer to commissions or other benefits that we may pay to an Intermediary" (clause 41). Both codes bind their members only, so ask a broker which code it follows.
Sources: Mortgage and Finance Association of Australia, Code of Practice (PDF), 26 September 2026, clauses 6.2, 6.13 and 11.2; Australian Finance Industry Association, Finance Industry Code of Practice, clause 41, in force from 1 October 2026. Both read 2 October 2026.Does the best interests duty apply to business asset finance?
No. The best interests duty applies to mortgage brokers on credit regulated by the National Credit Act, so it does not reach business asset finance used for a business purpose. That leaves the codes, the unfair contract terms law and your own questions as the check on a broker's recommendation: ask why this lender, which others were considered, and what the commission is.
Source: ASIC, Regulatory Guide 273: Mortgage brokers, best interests duty, RG 273.5 to 273.7, read 2 October 2026.Where do the protections on business asset finance stop?
Most consumer credit protections stop at the business-purpose line, so business asset finance relies on a narrower set: unfair contract terms law, AFCA for small businesses, and the banking and finance industry codes, each with its own limit. The table shows who each one covers and where it runs out.
| Protection | Who it covers | Where it stops | Source and date |
|---|---|---|---|
| National Credit Code | Credit to a natural person or strata corporation, wholly or predominantly for personal, domestic or household purposes, or for residential investment property | Business-purpose credit; and "Loans to companies are not subject to the credit legislation." | ASIC, National Credit Code, updated 1 August 2025; ASIC, credit legislation FAQs |
| Unfair contract terms law (ASIC Act) | A small business with fewer than 100 employees or turnover under $10 million, on a standard form contract | Contracts with an upfront price over $5 million, or genuinely negotiated terms; only a court can declare a term unfair, and it is then void | ASIC, INFO 211, read 2 October 2026 |
| AFCA complaints | Small businesses with fewer than 100 employees, including primary producers | A credit facility over $6.3 million (complaints lodged from 1 January 2024), and lenders that are not AFCA members; commercial-only lenders need not join | AFCA, small business page; ASIC, INFO 207, updated 19 April 2024 |
| Banking Code of Practice | Small business customers of banks that adopt it: turnover under $10 million, fewer than 100 full-time equivalent staff and total debt under $5 million | Non-bank lenders, and a business over any one of those limits | Australian Banking Association, Banking Code of Practice, effective 28 February 2025 |
| AFIA Finance Industry Code | Small business customers of participating members, using the unfair contract terms definition | Lenders that have not signed up, and commercial property or large corporate finance | AFIA, Finance Industry Code of Practice, in force from 1 October 2026 |
Sources: ASIC, National Credit Code and FAQs: Does the credit legislation apply?; ASIC, INFO 211 Unfair contract term protections for small businesses; Australian Financial Complaints Authority, Small business; ASIC, INFO 207 Disputes about commercial loans; Australian Banking Association, Banking Code of Practice, Part E definitions; Australian Finance Industry Association, Finance Industry Code of Practice, clause 6 and Schedule 3, clause 3.3. All read 2 October 2026.
Two checks before you sign follow from this. First, confirm the lender is an AFCA member; ASIC's advice where a commercial-only lender is not is to "seek private legal advice". Second, do not expect a comparison rate on a business quote, because the comparison rate rule applies to consumer credit advertising; our glossary explains why business quotes skip the comparison rate.
Why do asset finance applications get declined?
Most asset finance declines come from a mismatch between the file and one lender's policy rather than from the asset or the business alone. Under the industry code a lender will "only provide our products and services to you where we believe you meet the requirements of our product and credit policy", and those policies differ on ABN age, credit history, documents, and the age, type and seller of the asset (broker-desk observation, October 2026). The Reserve Bank's October 2026 review found most lenders had not materially changed their willingness to lend to businesses this year, apart from some small reductions for transport. So a decline from one lender says little about the next once the file is matched properly; the declined finance guide covers what to do after a car, truck or equipment finance decline.
Sources: Australian Finance Industry Association, Finance Industry Code of Practice, Schedule 3, clause 3.13; Reserve Bank of Australia, Financial Stability Review, October 2026, chapter 2. Both read 2 October 2026.Can you pay out or refinance asset finance early?
Yes, usually, but an early payout normally costs more than the balance you see, because contracts can add early termination costs and, in published lender terms we read on 2 October 2026, recover unearned commission, so get the figure in writing before you decide. A lender bound by the industry code must show any early repayment fees in its terms before you sign, and will give you a statement of your outstanding balance on request within 14 calendar days for a loan under a year old and within 30 calendar days after that. Refinancing works the same way: the new lender pays out the old contract from that written figure. Read how a payout figure is worked out before you ask for one.
Source: Australian Finance Industry Association, Finance Industry Code of Practice, Schedule 3, clauses 3.15 and 3.21, in force from 1 October 2026, read 2 October 2026. Binds participating members only.Business asset finance is secured finance for a business asset, written as a loan, hire purchase or lease, and lent by banks, non-banks, maker finance arms and, for bigger businesses, private credit funds. Brokers are usually paid by the lender, and because the finance is for a business purpose, most consumer credit law does not apply; unfair contract terms law, AFCA and the industry codes do, up to their limits.
Key takeaway: match the file to the right lender type, get the commission and any fee disclosed before you proceed, and check the lender is an AFCA member before you sign.Frequently asked questions
Asset finance covers the loan or lease and the business asset it pays for: vehicles, trucks and trailers, machinery and plant, medical, hospitality and workshop equipment, and technology such as servers. It usually means an equipment loan or chattel mortgage, hire purchase, a finance lease or a rental. It does not usually include invoice finance, an unsecured loan or a novated lease, which work differently. Our glossary sets out what asset finance means in one line.
ABL, asset-based lending, is a facility secured over assets a business already holds, such as receivables, stock and plant, usually used for working capital. ABF, asset-based finance, is a private credit term EY uses for lending that targets assets rather than operating companies, from equipment pools to receivables. Business asset finance, which buys one vehicle or machine, is narrower than both. For funding against unpaid invoices, see how invoice finance works.
There is no single typical rate, because pricing depends on the asset, its age and seller, the term, any balloon, and your documents and credit. Business quotes also usually show no comparison rate, since that rule applies to consumer credit advertising, so compare the rate, the fees and the payout terms together. Our chattel mortgage rates guide keeps a dated band, and the glossary explains the comparison rate and its limits.
An asset finance broker reads your business and the asset, matches them to a lender whose policy fits, prepares the application and manages it through approval and settlement. Most are paid by lender commission, and a broker who belongs to the MFAA must disclose that commission, or how it is worked out, before you proceed. A broker is most useful when your file sits outside a bank's comfort zone; you can see which non-bank lenders take which files.
Yes. Sole traders, partnerships, companies and trusts can all use business asset finance, provided the asset is mainly for business use. A newer ABN narrows the lender choice and can mean a deposit, a stronger asset or alternative documents such as BAS and bank statements instead of tax returns. Non-bank lenders are more likely to consider these files than banks (broker-desk observation, October 2026). The guide to asset finance without full financials covers what lenders accept.
It depends on the structure. With an equipment loan or chattel mortgage your business owns the asset from settlement and the lender holds security over it. With hire purchase the financier owns it until the final payment. With a finance lease or rental the financier owns it throughout, and you use it for the rentals. Our glossary explains what a chattel mortgage is, the structure most business asset finance uses.
Usually, for the business-use share. With a loan structure your business generally claims the interest and the decline in value of the asset for business use; with a lease it generally claims the rentals instead. Small businesses may also be able to use the instant asset write-off on an asset they hold for tax purposes. Which structure suits your tax position is a question for your accountant. Our glossary explains how the instant asset write-off works.
Yes, with more conditions. Lenders limit how old an asset can be by the end of the term, may want an inspection or valuation, and on a private sale will want proof the seller owns it and a clear PPSR search before they pay (broker-desk observation, October 2026). Some lenders will not take private sales at all, which narrows the choice. The glossary explains a PPSR search on a private sale and what it shows.
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