How Equipment Finance Works in Australia: Step-by-Step Guide for Business

Equipment is the engine of most Australian businesses — and buying it outright eats cash that could fund growth, cover payroll, or handle the next job. Equipment finance lets you acquire the tools, machinery, vehicles, and technology your business needs while preserving working capital.

This guide walks through exactly how equipment finance works in Australia — the structures available, how approval works, what it costs, and how to get the most competitive deal.

What Is Equipment Finance?

Equipment finance is a broad term for any lending product that helps a business acquire physical assets — from a $15,000 trailer to a $500,000 excavator. Rather than paying cash upfront, the business makes regular repayments over a fixed term, and the asset itself typically serves as security for the loan.

Common equipment types financed in Australia:

  • Commercial vehicles — utes, vans, trucks, forklifts
  • Construction and earthmoving — excavators, bobcats, graders, cranes
  • Agricultural — tractors, harvesters, irrigation equipment
  • Medical and dental — imaging equipment, surgical tools, dental chairs
  • Technology — servers, manufacturing equipment, printing machinery
  • Hospitality — commercial kitchen equipment, refrigeration units
  • Trailers and attachments — enclosed trailers, tippers, flat-top trailers

The Main Equipment Finance Structures in Australia

1. Chattel Mortgage (Most Common)

You own the asset from day one. The lender takes a security interest over it until the loan is repaid. You claim the full GST upfront, claim depreciation annually, and deduct the interest on repayments. Most popular for GST-registered businesses that want immediate ownership and maximum tax deductions. Learn more about chattel mortgages here.

2. Finance Lease

The lender owns the asset and leases it to your business for a fixed term. At the end, you can buy, re-lease, or return the asset. Full lease payments may be tax deductible. Best for businesses that want flexibility at the end of term or prefer not to own the asset on their balance sheet.

3. Operating Lease / Rental

The lender owns the asset and you effectively rent it for the lease period with no ownership option. Common for equipment with short useful life or where frequent upgrades are needed (technology, small tools). Payments are a business expense but there’s no equity built.

4. Hire Purchase

Similar to a chattel mortgage — you hire the asset and ownership transfers fully once all payments are made. Less common than chattel mortgage but used for certain equipment categories. GST and tax treatment is similar to chattel mortgage.

How Equipment Finance Approval Works: Step-by-Step

Step 1: Identify Your Asset and Loan Amount

Know what you’re buying — make, model, age (new or used), and price. The asset type and age significantly affect which lenders will finance it and at what rate. New equipment from a dealer will access the widest lender pool and best rates. Equipment over 10 years old narrows the lender options considerably.

Step 2: Assess Your Business Profile

Lenders assess equipment finance applications on several dimensions:

  • Time in business: 2+ years of ABN history accesses the full lender panel. Less than 12 months may require a low-doc approach or personal guarantee
  • Business financials: Tax returns, profit and loss statements, and bank statements demonstrate serviceability
  • Credit file: Both your personal and business credit files are assessed. Adverse listings reduce lender options and increase rates
  • Industry: Some lenders have appetite restrictions for certain industries (construction, hospitality, mining). A broker knows which lenders are active in your sector

Step 3: Apply Through a Broker

For equipment finance, using a specialist equipment finance broker is particularly valuable because the lender landscape is fragmented — different lenders specialise in different asset types and industries. A broker with a panel of 30–40 lenders will know which lender is most competitive for your specific asset type, business profile, and industry.

Applying through a broker also means a single application is assessed against multiple lenders without multiple credit enquiries damaging your credit file.

Step 4: Submit Documentation

Standard documentation for a full-doc equipment finance application:

  • Last 2 years’ business and personal tax returns
  • Last 2 years’ ATO Notices of Assessment
  • Last 3 months’ business bank statements
  • ABN certificate and GST registration (if applicable)
  • Quote or invoice for the equipment being purchased
  • Driver’s licence (for directors/owners)

For low-doc applications (typically 6–24 months ABN history), bank statements, BAS statements, and an accountant’s declaration may substitute for full tax returns.

Step 5: Receive Conditional Approval

Most equipment finance applications through Journey Finance receive conditional approval the same business day. The lender assesses your financials, checks your credit file, and confirms the asset meets their criteria. Conditional approval specifies the loan amount, rate, term, and any conditions (e.g., personal guarantee).

Step 6: Asset Confirmation and Settlement

Once conditionally approved, the lender confirms the asset details (via invoice or dealer confirmation) and formal approval is issued. Funds are paid directly to the supplier or dealer. For new equipment from a dealer, settlement typically occurs within 24–48 hours of full document submission. Private sales take slightly longer due to additional verification steps.

What Does Equipment Finance Cost?

Equipment finance rates in Australia vary based on the lender, asset type, loan term, and your business credit profile. In 2026, indicative rates for well-qualified businesses are:

  • New equipment (chattel mortgage, strong credit): 6.5% – 8.5% p.a. comparison rate
  • Used equipment under 5 years old: 7.5% – 10.0% p.a.
  • Used equipment 5–10 years old: 8.5% – 12.0% p.a.
  • Specialised or niche equipment: 9.0% – 14.0% p.a.

Rates are indicative only and subject to change. Your rate will depend on your business profile, asset type, and lender.

Calculator Apply Now