Equipment finance lets your business acquire the vehicles, machinery, tools or technology it needs without paying the full cost upfront — spreading it over the life of the asset while you put it to work. For Australian businesses in trades, transport, agriculture, hospitality and manufacturing, it’s often the difference between growing now and waiting years to save. This guide compares your options, the real costs, and how to choose.
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What is equipment finance?
Equipment finance is any funding used to buy or use business assets — from a single ute or coffee machine to an entire production line. Because the asset itself usually acts as security, rates are typically lower than an unsecured business loan, and approval is often quicker.
The main decision is structure: who owns the asset, how it’s treated for tax, and what happens at the end of the term.
The four main structures in Australia
Chattel mortgage
You own the asset from day one; the lender takes a mortgage over it until repaid. The most common structure for Australian businesses — you can typically claim depreciation and the GST on the purchase price, and interest is generally deductible. Best when you want ownership and are registered for GST on an accruals basis.
Finance lease
The lender owns the asset and leases it to you for fixed payments. You use it, then have options at the end (pay a residual to own it, upgrade, or return it). Lease payments are generally deductible. Good for assets you may want to upgrade regularly.
Hire purchase
You hire the asset and pay it off over time, taking ownership after the final payment. A middle ground between a lease and a chattel mortgage.
Operating lease / rental
Effectively a long-term rental — you use the asset without any intention to own it. Lowest commitment, ideal for technology that dates quickly or gear you only need for a project.
What equipment finance costs
- Interest rates are typically lower than unsecured finance because the asset secures the loan.
- Terms usually run 1–7 years, matched to the asset’s useful life.
- Deposit is often not required — many facilities fund 100% of the purchase, sometimes including delivery and installation.
- Balloon / residual payments can lower monthly repayments but leave a lump sum at the end — factor it in.
The cheapest structure depends as much on the tax treatment as the headline rate, so it’s worth a quick word with your accountant before signing.
How to apply
- Get a quote for the specific asset (new or used).
- Gather financials — recent business bank statements, and for larger amounts, financials or a BAS.
- Choose a structure (chattel mortgage vs lease vs rental) based on ownership and tax goals.
- Compare offers on rate, term, residual and fees — not just the monthly repayment.
Approval for straightforward asset purchases is often fast, sometimes with low-doc options for smaller amounts.
Alternatives and related finance
- Short-term business loans — if you need flexible cash, not just an asset.
- Business line of credit — for ongoing, variable needs.
- Merchant cash advance — fast capital repaid from card sales.
Business funding guides
- Business Loans in Australia: the complete guide — start here
- Business line of credit
- Short-term business loans
- Merchant cash advance
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Frequently asked questions
What’s the difference between a chattel mortgage and a lease? With a chattel mortgage you own the asset from the start and finance it; with a lease the lender owns it and you pay to use it. Ownership and tax treatment are the main differences — ask your accountant which suits.
Can I finance used equipment? Yes — most lenders finance used assets, though the term may be shorter and the rate slightly higher depending on the age and type.
Do I need a deposit? Often not — many equipment finance facilities fund 100% of the purchase, sometimes including delivery and installation.
Is equipment finance tax-deductible? Generally the interest and depreciation (chattel mortgage) or the lease payments (lease) are deductible, but treatment varies by structure — confirm with your accountant.
The bottom line
Equipment finance turns a big upfront cost into manageable payments while the asset earns its keep. The rate matters, but the structure — chattel mortgage, lease, hire purchase or rental — often matters more, because it drives ownership and tax. Get the asset quote, compare structures on total cost and tax treatment, and check with your accountant before you sign.