Asset & Equipment Finance

Asset finance covers loans and leases used to acquire income-producing equipment, with the asset itself serving as security. Cars and utes are the most familiar example, but the same products finance trucks and trailers, excavators and earthmoving gear, forklifts, agricultural machinery, medical and dental equipment, commercial kitchen fit-outs, IT hardware and even boats and caravans for personal use. Because the equipment secures the loan, lenders generally don't require property security, deposits can be low or nil for established businesses, and approval is often quicker than for a general business loan.

The main structures are the chattel mortgage, where your business owns the asset from day one and the lender holds a mortgage over it; the finance lease, where the lender owns the asset and you rent it with an option to purchase at the end; and hire purchase or rental arrangements. For employees, a novated lease through your employer can be another route. Each has different implications for GST, depreciation and deductions, so your accountant's input matters. Most lenders also offer a balloon (residual) payment at the end of the term, which lowers regular repayments but leaves a lump sum to pay, refinance or cover by selling the asset.

Lenders assess the asset's age, type and resale value as well as your business's trading history, ABN and GST registration, and existing commitments. Established businesses with a clean record may qualify for streamlined low-doc asset finance up to certain limits with minimal paperwork. Traps to watch include dealer finance that looks cheap because of a large balloon, financing an asset over a term longer than its useful life, and paying for insurance or add-ons rolled into the loan without noticing. We compare across our panel, structure the term and balloon sensibly, and arrange finance for private sales and auctions, not just dealership purchases.