Whether you’re a tradie buying your first work ute, a manufacturer investing in new machinery, or a business owner fitting out a commercial kitchen, buying equipment outright isn’t always the smartest use of capital. Equipment finance lets you get the asset you need now, spread the cost over time, and in many cases, access tax benefits that a cash purchase doesn’t give you.
It’s one of the most commonly used forms of business finance in Australia, and for good reason. Because the asset itself acts as security for the loan, rates are typically lower than unsecured business borrowing, and lenders can often move faster too.
What Is Equipment Finance?
Business equipment finance is a broad term for any commercial lending product used to purchase or access an asset for business use. That covers everything from vehicles, trucks and forklifts to commercial kitchen equipment, medical devices, construction machinery, office technology, and manufacturing plant.
The key feature that separates equipment finance from a standard business loan is that the asset being purchased secures the debt. The lender has something tangible to recover if repayments aren’t met, which reduces their risk and allows them to offer more competitive equipment loan rates than they could on unsecured finance.
Equipment Finance Structures: Which One Suits Your Business?
There are four main structures used in Australia, and choosing the right one affects your ownership rights, tax position, cash flow, and what happens to the asset at the end of the term. Here’s how they compare:
| Structure | You Own the Asset | Tax Treatment | Best For |
|---|---|---|---|
| Chattel mortgage | From day one | GST credit upfront, interest and depreciation deductible | Businesses wanting ownership and maximum tax benefits |
| Hire purchase | At final payment | Interest and depreciation deductible during term | Businesses who want ownership but prefer deferred title |
| Finance lease | At end of term (option) | Lease payments deductible as operating expense | Businesses preferring off-balance-sheet treatment |
| Operating lease | No | Rental payments deductible | Short-term use, regular upgrades, or tech assets |
Chattel mortgage is the most common structure for businesses that want to own the asset. Under a chattel mortgage, the business takes ownership from day one and the lender registers a security interest over the asset until the loan is repaid. GST-registered businesses can claim the full GST credit on their next BAS, and interest and depreciation are typically tax deductible.
Finance lease suits businesses that prefer not to own the asset outright or want to keep it off their balance sheet. The lender purchases and owns the asset, leasing it to you for an agreed term. Lease payments are generally deductible as an operating expense, and at the end of the term you can buy the asset for its residual value, extend the lease, or hand it back.
For businesses financing vehicles specifically, our truck loans page covers commercial vehicle finance in more detail. Always confirm tax treatment with your accountant before choosing a structure.
What Are Current Equipment Finance Rates?
Equipment finance rates in Australia vary depending on your credit profile, the type and age of the asset, your trading history, and the lender. As of 2026, following the RBA’s February cash rate increase to 3.85%, indicative rates for well-qualified businesses sit in these ranges:
| Asset Type | Indicative Rate Range (2026) |
|---|---|
| New equipment, strong credit (chattel mortgage) | 6.50% to 8.50% p.a. |
| Used equipment under 5 years old | 7.50% to 10.00% p.a. |
| Used equipment 5 to 10 years old | 8.50% to 12.00% p.a. |
| Specialised or niche equipment | 9.00% to 14.00% p.a. |
| Unsecured equipment loan | 12.00% to 25.00%+ p.a. |
These are indicative ranges only. Your actual rate depends on your specific business profile and the lender your broker matches you with.
Here’s what that rate difference means in dollar terms on an $80,000 equipment loan over five years:
| Loan Amount | Rate | Monthly Repayment | Total Interest Paid |
|---|---|---|---|
| $80,000 | 7.00% p.a. | $1,584 | $15,040 |
| $80,000 | 9.00% p.a. | $1,660 | $19,600 |
| $80,000 | 12.00% p.a. | $1,779 | $26,740 |
On the same loan, the difference between 7% and 12% is nearly $12,000 in extra interest over the five-year term. That’s a meaningful gap, and it underscores why comparing across lenders, not just going to your bank, matters. Use the Yes Loans loan calculator to model your own figures.
As with all lending, always compare on the comparison rate rather than the advertised rate. The comparison rate folds in most standard fees and gives you a more accurate picture of what you’ll actually pay.
The main factors that affect your equipment finance rate:
- Credit profile: Your personal and business credit history are both assessed
- Asset age and type: Newer, mainstream assets attract sharper rates. Older or niche equipment carries more lender risk
- Trading history: Two or more years of ABN history typically accesses the full lender panel
- Deposit: Putting money in upfront reduces loan-to-value and can improve your rate by 0.5% to 1.5%
- Loan term: Shorter terms tend to attract lower rates, though monthly repayments will be higher
What Do Lenders Look for in a Business Equipment Loan Application?
Most lenders assess a combination of your business profile and the asset being financed. Here’s what to have ready:
- Active ABN registered in the business’s name
- Trading history: six months minimum for non-bank lenders; two or more years for mainstream banks
- Business bank statements: typically six to twelve months
- Asset details: make, model, age, and purchase price. New equipment from a dealer accesses the widest lender pool and best rates
- Personal and business credit score: minimum around 475 for most lenders
- Personal guarantee: required for most commercial lending
Can I get equipment finance with less than 12 months trading?
Yes, in many cases. Non-bank lenders and specialist equipment finance providers are often willing to consider newer businesses, particularly where the loan is secured against a mainstream asset and the director has a strong personal credit history. Low-doc options exist for businesses that can’t yet provide full financials. These typically rely on bank statement data rather than tax returns, and may require a deposit or higher rate to reflect the additional risk.
Tax Benefits Worth Knowing About
One of the practical advantages of asset-backed equipment finance, particularly under a chattel mortgage structure, is the potential for meaningful tax benefits. Speak to your accountant about what applies to your specific situation, but here are the main ones:
GST input tax credit: If your business is registered for GST on a cash basis, you can generally claim the full GST on the purchase price of the asset in your next BAS after settlement. This is an upfront benefit that a finance lease doesn’t provide in the same way.
Interest deduction: The interest component of your repayments is typically deductible as a business expense for the life of the loan.
Depreciation: As the owner of the asset, you can claim depreciation through your annual tax return.
Instant Asset Write-Off: For the 2025-26 financial year, eligible small businesses (with turnover under $10 million) can immediately deduct the full cost of assets under $20,000 purchased and installed by 30 June 2026. From 1 July 2026, this threshold reverts to $1,000 under ATO rules, removing the benefit for most equipment purchases. If you’ve been considering an equipment purchase, the timing is worth discussing with your accountant before EOFY.
How a Broker Helps You Find the Right Equipment Loan
The equipment finance market in Australia is competitive, and rates can vary by 3% to 5% between lenders for the same transaction. What one lender considers high risk, another may view as a standard application based on their portfolio focus and the industries they service.
This is where a broker earns their keep. Rather than applying to a single lender and accepting whatever rate you’re offered, a broker matches your business profile and asset type to the lenders most likely to say yes at the best available rate, using one application that leaves one mark on your credit file.
At Yes Loans, our commercial loans team works with businesses across Perth and nationally. Our panel includes lenders with specific appetite for trade, construction, agriculture, transport, and professional services equipment across a wide range of asset types and business profiles. We work harder to say yes more often, including for newer businesses and applications that a single bank might not have looked at twice.
Key Takeaways
- Equipment finance covers any commercial lending product used to purchase a business asset, with the asset itself typically acting as security for the loan
- The four main structures are chattel mortgage, hire purchase, finance lease, and operating lease. Each has different ownership, tax, and cash flow implications
- Current equipment finance rates range from around 6.50% to 8.50% p.a. for new assets with strong credit, stepping up for older equipment or more complex applications
- A chattel mortgage lets GST-registered businesses claim the full GST credit on their next BAS. That’s a significant upfront tax benefit compared to a lease
- The Instant Asset Write-Off allows eligible businesses to immediately deduct assets under $20,000 purchased before 30 June 2026. The threshold drops to $1,000 from 1 July 2026
- Equipment finance is available to businesses with as little as six months trading history, though rates and lender options improve significantly with a longer track record
- A broker matches your asset type and business profile to the right lender with one application, giving you access to a broader range of equipment finance rates than going direct
Ready to talk equipment finance? Chat to one of our brokers on (08) 9472 3000, visit our equipment loans page, or explore our chattel mortgage options if you’re financing a business vehicle.
Yes Loans is an Australian Credit Licensed finance broker (ACL 392426). Credit is subject to lender approval and responsible lending assessment. Tax information in this article is general in nature. Always confirm your specific position with a qualified accountant. Rate figures are indicative as at 2026 and subject to change.
