Overview
Equipment finance is the umbrella term for funding used to acquire or use business equipment in Australia - from IT and office fit-outs to specialist tools, plant and heavy machinery. It lets you align repayments with business income, preserve cash and select an ownership outcome that fits your strategy.
The best structure depends on three things: the asset, your cash flow, and what you want to happen at end of term. Start with the outcome you want, then choose the facility that supports it.
How equipment finance works explains the steps and timing in more detail.
Equipment finance structures at a glance
Equipment finance covers the same four core structures available for any business asset. Here's how they compare for typical equipment purchases.
| Factor | Chattel Mortgage | Hire Purchase | Finance Lease | Operating Lease |
|---|---|---|---|---|
| Ownership during term | You own from day 1 | Financier owns | Lessor owns | Lessor owns |
| Ownership at end | Already yours | Transfers after final payment | Pay residual / refinance / trade | Return, extend or upgrade |
| Balance sheet (AASB 16) | Asset + loan liability | Asset + HP liability | Right-of-use + lease liability | Right-of-use + lease liability (low-value / short-term exemptions) |
| GST claim timing | Up front on purchase price | Up front on purchase price (agreements from 1 Jul 2012) | On each lease payment | On each lease payment |
| Typical tax deductions | Interest + depreciation | Interest + depreciation | Lease payment portion | Lease payment portion |
| Balloon / residual | Optional 0-30% | Optional 0-30% | Contracted residual at end | Set return value / extension terms |
| Typical rate range (p.a.) | 6.5% - 12% | 6.5% - 12% | 7% - 13% | 7% - 13% (often bundled) |
| Best suited to | Long-life assets where ownership matters | Similar to chattel mortgage; some tax timing differences | Newer assets with a planned upgrade | Fast-changing tech, fleet replacement |
Compare equipment finance options
- Chattel Mortgage: Own from day one, claim depreciation and interest. Option for a balloon to lower repayments.
- Hire Purchase: Similar to chattel mortgage with ownership at completion. Useful for certain accounting preferences.
- Finance Lease: Use the asset for a term with a set residual. Suits planned upgrades and cash flow smoothing.
- Operating Lease: Off-balance-sheet style use (subject to accounting treatment), typically including hand-back or upgrade at end.
Not sure which way to go? See our comparison: Equipment loan vs lease.
How it works
An equipment finance application starts with the asset details and your trading position. From there, the finance type, term and repayment profile (including any deposit or balloon/residual) can be matched to your goals. The process usually includes selecting a structure, confirming documentation, conditional approval, valuation or supplier checks, final approval and settlement.
The aim is to match the finance structure to your objective rather than forcing the asset into a generic facility. Learn more in approval time and process.
Rates, terms and repayments in Australia
- Rates: Driven by credit profile, industry, asset age/type, term and deposit/residual. See our guide to equipment finance interest rates.
- Terms: Commonly 12-84 months depending on asset life and cash flow. Explore loan terms and how they affect total cost.
- Deposits & balloons: Understand minimum deposit expectations and balloon/residuals to right-size repayments.
- Tax & GST: Review tax benefits and GST treatment with your accountant for your chosen structure.
Key considerations before you choose
- Asset profile: type, age, hours, condition and resale outlook
- Ownership vs flexibility at end of term
- Cash flow comfort and seasonal or irregular income
- Documentation strength and trading history
- Balloon/residual planning and total cost of ownership
Weigh the pros and cons of equipment finance for your business case.
Eligibility, approval and documentation
Approval is shaped by your borrower profile, the asset and how clearly your application is presented. Lenders commonly look for ABN age, trading performance, credit history, asset details, supplier information and intended use.
- Eligibility: Check who qualifies for equipment finance and minimum credit score guidance.
- Documents: See documents required (e.g., IDs, ABN, BAS/financials, bank statements, quote/invoice).
- Timing: Understand how long approval takes, from low doc to full doc applications.
Industries and equipment we finance
Explore finance options tailored to your asset and industry:
Popular solutions for different situations
- Low doc equipment finance for established ABNs with limited paperwork
- No deposit options to preserve working capital
- Startup equipment finance for new businesses
- Bad credit asset finance with realistic pathways
- Fast approval when timing matters
- Asset refinance to unlock cash or clear balloons
- Equipment upgrade finance for planned refresh cycles
Get help with equipment finance
Compare structures, confirm documentation, and get quotes aligned to your cash flow and end-of-term goals. Our Australian team will respond within one business day.
Prefer to start with a comparison? Ask for side-by-side quotes.
Frequently asked questions
What is equipment finance?
It’s funding to buy or use business equipment in Australia. Options include chattel mortgage, hire purchase, finance lease and operating lease, each with different ownership and tax outcomes.
Is equipment finance right for every business?
No. Suitability depends on the asset, trading stage, credit profile, cash flow and end-of-term goals. Compare options before deciding.
Do I always need a deposit?
Not always. Some approvals proceed with no deposit, while higher-risk scenarios may benefit from 10-30% down. See our deposit guide.
Can used assets be financed?
Often yes, including private sales. Age, condition and resale profile can affect approval and pricing.
Does credit history matter?
Yes. Credit profile influences product fit, pricing and paperwork. Review credit requirements and bad credit options.
What about GST and tax?
GST and tax treatment varies by structure. See GST treatment and tax benefits and confirm with your accountant.
Final takeaway
Equipment finance in Australia works best when the facility is built around your asset, cash flow and end-of-term plan. Compare structures, understand rates and documents, then choose the option that fits your objectives.