Equipment finance in Australia: how to fund machinery, vehicles and tech

Equipment finance is funding for business assets — machinery, vehicles, technology, fit-outs — where the asset being bought secures the loan. Because the financier can recover and resell the equipment if repayments stop, it can often approve finance with less paperwork and less reliance on property than a general business loan would need.

Equipment finance in Australia is one of the most widely used forms of business credit, and for good reason. It spreads the cost of an income-producing asset over the years it earns money, keeps cash in the business for wages and stock, and leaves the owners’ property out of the picture in most cases.

What types of equipment finance are there?

There are four main structures, and the differences matter for ownership, GST and tax. business.gov.au describes a chattel mortgage as similar to hire purchase except that the business owns the asset from the start, and hire purchase as paying the item off in instalments until you own it at the final payment.

Structure	Who owns the asset	GST on the purchase	What you pay	End of term
Equipment loan / chattel mortgage	You, from day one	GST in the price is generally creditable as a purchase	Loan repayments; interest has no GST	You own it outright, after any balloon
Hire purchase	The financier, until the final payment	Timing depends on cash or accruals accounting	Instalments	Ownership passes to you
Finance lease	The financier	GST is in each lease payment	Lease payments	Pay the residual, refinance, or return
Operating lease / rental	The financier	GST is in each rental payment	Rental payments	Return or upgrade

Lending money is an input-taxed financial supply under ATO rules, which is why loan interest carries no GST. Lease payments, by contrast, include GST, and the ATO lets you claim credits one payment at a time.

The equipment loan or chattel mortgage is the most common choice for businesses that want to own their gear and claim depreciation. Leases suit businesses that want to upgrade regularly — technology is the classic case — or would rather return the asset than own it at the end.

What do equipment lenders look at?

Equipment lenders look at the asset first, then the business. The questions they ask:

1. What is it and how easily would it resell? A popular excavator, ute or prime mover is straightforward. Custom-built machinery or fit-outs are harder.
2. New or used, dealer or private? Used and private-sale assets may need an inspection, valuation and a PPSR search to confirm nothing else is registered against them.
3. How long has the business traded, and does it have an ABN and GST registration?
4. What’s the credit history of the business and directors?
5. For larger amounts, can the business show repayments are affordable through bank statements, BAS or financials?

The Personal Property Securities Register is the national register where security interests in personal property are recorded and searched. Before buying second-hand equipment, a PPSR search tells you whether a previous owner’s financier still has a claim on it.

Who offers equipment finance in Australia?

Banks, non-bank lenders, manufacturer-linked financiers and specialist asset financiers all compete for equipment deals. Our page on asset and equipment financiers explains how each type approaches risk. As a rule of thumb, banks offer the sharpest pricing to well-documented borrowers; non-banks and specialists are more flexible on trading history, credit and older assets; and manufacturer finance can be attractive for a specific new brand.

Not sure which type of financier suits your purchase? Tell us what you’re buying and a specialist will point you in the right direction — no credit check to ask.

How do the instant asset write-off and equipment finance fit together?

The two work side by side. The ATO’s $20,000 instant asset write-off lets businesses with aggregated turnover under $10 million immediately deduct the cost of eligible assets costing less than $20,000, and it has been made permanent from 1 July 2026. Assets costing $20,000 or more can go into the small business simplified depreciation pool, depreciated at 15 per cent in the first year and 30 per cent each year after.

Financing an asset doesn’t stop you claiming the write-off if you own it — which is one reason equipment loans and chattel mortgages are popular before EOFY. Leased assets are treated differently because the financier owns them. Our guide to the instant asset write-off and finance covers the timing in more detail, and your accountant should confirm eligibility before you buy.

How do you use an equipment finance calculator properly?

An equipment finance calculator is only as useful as the numbers you feed it. To compare offers fairly:

• Start with the amount financed — the price, less any deposit or trade-in, plus any fees added to the loan.
• Use the total cost in dollars each financier quotes, not a headline figure.
• Include the balloon or residual. A balloon lowers regular repayments but leaves a lump sum at the end, which you’ll need to pay, refinance or cover by selling the asset.
• Test weekly, fortnightly and monthly repayments against your cash flow, especially in slow months.

Our business loan calculator works from the total cost in dollars and shows repayments at each frequency, with a full schedule.

Illustrative example: a landscaping business buys a compact loader

Purely illustrative, no real business: a landscaping company with two years of trading wants a compact track loader costing $88,000 including GST from a dealer. It has no property in the business name and doesn’t want to use the owners’ home.

An asset financier offers a chattel mortgage over five years with a modest balloon. The business owns the loader from day one; as it’s registered for GST, its accountant confirms the GST in the price can be claimed on the next BAS. The loader goes into the simplified depreciation pool, because it costs more than the $20,000 write-off threshold. Repayments come out monthly, timed after the business’s main client payments clear. The owners compare the total cost against a five-year lease, decide they want to own the machine long-term, and go with the chattel mortgage.

Can you finance used equipment or a private sale?

Yes, in most cases, though lenders take a little more care. Used equipment from a dealer is routine. Private sales and older assets bring three extra steps:

1. Identity and ownership checks on the seller, to make sure they’re entitled to sell.
2. A PPSR search on the serial or VIN, so the financier knows no earlier lender still holds security. If one does, it has to be paid out at settlement.
3. An inspection or valuation, particularly for heavy machinery, to confirm condition and resale value.

Lenders may also cap the term so the loan ends before the asset gets too old, and some ask for a deposit on older gear. The upside is that used equipment often costs much less, so the total amount financed — and the risk you carry — is smaller. If you’re buying privately, line up the finance before you agree on a settlement date; the checks above take a few days to organise.

What are the common mistakes with equipment finance?

• Term longer than the asset’s useful life. You’re still paying when it’s worn out.
• A big balloon with no plan for it. It lowers repayments now and creates a problem later.
• Financing the wrong asset type. Vehicles, trucks and machinery each have specialist products — see business car loans and truck finance.
• Ignoring the deposit option. A modest deposit can widen lender choice for newer businesses.
• Signing at the dealer without comparing. Dealer finance can be convenient, but it pays to see an alternative.

For the wider picture of funding vehicles and machinery, see equipment and vehicle funding and the full business loans hub.

Ready to put the right equipment to work?

If you’ve found the asset and want finance that suits how your business earns, we can help you find the right structure and financier. Check whether you qualify in about a minute. Enquiring doesn’t touch your credit file, your details aren’t fired off to a long list of financiers, and a real person looks at the asset and your business. Tell us accurately what you’re buying, its price and how long you’ve traded — it’s the fastest route to the right match.