What is Equipment Finance?
Equipment finance is a funding solution that enables businesses to acquire essential equipment—such as vehicles, machinery, or technology—without paying the full cost upfront. Instead, businesses can spread payments over time, using the equipment as collateral.
Why Use Equipment Finance?
Businesses use equipment finance to:
- Access essential equipment immediately without large upfront costs.
- Preserve cash flow and working capital for other operational needs.
- Upgrade or replace depreciating assets more frequently to stay competitive.
- Benefit from flexible repayment terms and potential tax advantages
What are the different types of Equipment Finance?
There are three primary equipment finance structures, each offering different benefits depending on ownership, flexibility, and tax treatment:
- Chattel Mortgage: The borrower owns the equipment from day one, using the asset as security for the loan.
- Finance Lease: The lender retains ownership of the equipment during the lease term, with the option for the borrower to purchase it at the end.
- Hire Purchase: The borrower makes regular payments while using the equipment, with ownership transferring after the final instalment
What’s the difference between each option?
| Finance Type |
Ownership Treatment |
Balance Sheet |
Tax Treatment |
| Chattel Mortgage |
Ownership from the start |
Asset appears on balance sheet |
GST and depreciation claims available; interest on repayments may be deductible for business use |
| Finance Lease |
Lender owns the asset until lease ends |
Right-of-Use Asset and Liability |
Lease payments usually deductible as a business expense |
| Hire Purchase |
Ownership transfers after final payment |
Asset appears on balance sheet |
GST paid upfront but can be claimed. Interest and depreciation may deductible. |
Key Distinctions
- Chattel mortgage provides immediate ownership, allowing GST claims and depreciation deductions, with interest potentially deductible for business use.
- Finance leases typically don't list the asset on the balance sheet until ownership is transferred, but lease payments can be deducted as business expenses.
- Hire purchase places the asset on the balance sheet from the start, allowing GST claims upfront, with deductions on interest and depreciation.
What Types of Equipment Best Suit Being Financed?
Equipment finance is suitable for a wide range of business assets, including:
- Construction and earthmoving machinery
- Agricultural equipment (tractors, sprayers)
- Medical and diagnostic equipment
- Haulage and transport vehicles
- Marine vessels
- Office technology (computers, printers)
- Automotive (cars, trucks, trailers)
- Specialised equipment (gym, solar systems)
Generally, any tangible business asset (excluding real estate) can be financed if it retains value and can serve as collateral
How can a broker assist your business with equipment finance?
A finance broker can significantly simplify equipment financing for businesses by acting as an expert intermediary throughout the process. They assess your specific equipment needs and financial situation, then use their access to a broad network of lenders to find the most suitable and competitive finance options-saving you the time and effort of approaching multiple lenders yourself
Brokers handle the research, comparisons, and negotiations, ensuring you get the best rates and terms available
They streamline the application process by managing paperwork and guiding you through the required documentation, which reduces delays and increases your chances of approval
With their industry knowledge, brokers can tailor finance solutions to match your cash flow and business goals, and provide ongoing support from application to settlement
This comprehensive, personalised service allows you to focus on running your business while the broker manages the complexities of equipment finance on your behalf.