Types of Equipment Finance in Australia
There are several types of equipment finance available in Australia, each suited to different business needs. Here’s an overview:
1. Chattel Mortgage
A chattel mortgage is a common form of equipment finance where the lender provides a loan to purchase the equipment, but the business owns the equipment outright from day one. The lender takes a “mortgage” over the equipment as security until the loan is fully repaid.
- Advantages: Ownership from the start, tax-deductible interest and depreciation.
- Best for: Businesses that want to own their equipment outright and benefit from tax deductions.
2. Finance Lease
In a finance lease, the lender purchases the equipment and leases it to the business for an agreed period. At the end of the lease term, businesses have the option to purchase the equipment (usually with a final balloon payment), extend the lease, or return the equipment.
- Advantages: Lower upfront costs, flexibility at the end of the term.
- Best for: Businesses that want to preserve cash flow and flexibility in equipment ownership.
3. Operating Lease
An operating lease is similar to a finance lease, but it’s typically used for equipment with a short lifespan or that requires frequent upgrades. You lease the equipment, but there’s no option to purchase it at the end.
- Advantages: No need to worry about outdated equipment; maintenance costs are often included.
- Best for: Businesses with high-tech or rapidly depreciating equipment needs.
4. Hire Purchase
Under a hire purchase agreement, the business hires the equipment from the lender and makes payments over time. Once the final payment is made, ownership of the equipment transfers to the business.
- Advantages: The business can spread payments over time while still using the equipment.
- Best for: Businesses that prefer owning their equipment but want to spread out the payments.
Benefits of Equipment Finance
There are several benefits to opting for equipment finance rather than purchasing assets outright:
- Preserving Cash Flow: Financing allows businesses to spread the cost of equipment over time, leaving capital available for other important operational expenses.
- Tax Deductions: Depending on the type of finance, interest payments, depreciation, and GST on loan repayments may be tax-deductible, providing significant savings for businesses.
- Ownership or Leasing Options: Businesses can choose the financing method that best fits their needs, whether they want to own the equipment outright or lease it for flexibility.
- Fixed and Flexible Repayments: Equipment finance agreements often come with predictable repayments, making it easier for businesses to plan and manage their budgets.
| Benefit |
What It Means for Tradies |
Quantifiable Impact |
| Preserves Cash Flow |
Spread equipment costs over time instead of paying upfront, keeping working capital free for wages, fuel, and materials. |
100% upfront cost avoided; repayments spread over 12–60 months |
| Tax Advantages |
Interest, depreciation, and GST components may be claimable, improving overall tax efficiency. |
Up to 100% of interest potentially deductible; GST often claimable on regular repayments |
| Ownership or Leasing Flexibility |
Choose to own the asset at the end of the term or upgrade regularly through leasing options. |
2–3 flexible structures (loan, lease, chattel mortgage); upgrade cycles as short as 2–5 years |
| Predictable Repayments |
Fixed or structured repayments help tradies plan cash flow and avoid surprises. |
Fixed repayments for 100% of term; weekly, fortnightly, or monthly options |
| Faster Access to Equipment |
Get the tools or machinery you need now instead of waiting to save the full amount. |
Approvals often within 24–72 hours; access equipment immediately |
How to Apply for Equipment Finance
The application process for equipment finance is straightforward, but it’s essential to compare different lenders and options to find the best deal. At Tradiespace, we’ve simplified this process with our loan tool, which allows you to compare dozens of lenders in minutes without impacting your credit score. Here’s how the process works:
- Enter Your Equipment Details: Input the type of equipment you need, the amount you want to borrow, and your preferred loan term.
- Compare Offers: Our loan tool will display multiple financing options, allowing you to compare interest rates, repayment terms, and fees.
- Choose Your Loan: Once you’ve compared offers, select the loan that best fits your needs. Our brokers will help you with the final steps and ensure you get the best possible deal.
- Secure Pre-Approval: Get pre-approved for financing in just a few minutes and move forward with confidence, knowing you have competitive financing secured.
Why Use Our Loan Tool?
At Tradiespace, our loan tool is designed to make equipment financing simple, fast, and transparent. Here’s why business owners across Australia trust us:
- Instant Comparison: Compare rates and terms from dozens of lenders in one place.
- No Impact on Credit Score: Explore your options risk-free.
- Expert Support: Our brokers will guide you through the process, ensuring you get the best possible deal.
- Quick Pre-Approval: Get pre-approved in minutes and secure the financing your business needs without delay.
Equipment Finance FAQs
Does applying for equipment finance affect my credit score?
Most lenders offer pre-approval or rate comparison using a soft credit check, which means 0 impact on your credit score until you proceed with a formal application.
Can I get equipment finance as a new business or sole trader?
Yes. Many lenders work with ABNs registered for as little as 6–12 months, and some accept low-doc applications using bank statements instead of full financials.
How much deposit is typically required?
Deposits can be as low as 0–10% depending on your profile, with many deals offering full (100%) financing for established businesses.
Can I finance used or second-hand equipment?
Yes. Most lenders finance used equipment up to around <strong5–10 years old, provided it’s in good condition and sourced from a reputable seller.
What happens if I want to upgrade equipment before the loan ends?
You can often refinance or restructure your agreement, allowing you to upgrade mid-term. Many businesses refresh equipment every 2–5 years using this approach.
Conclusion
Equipment finance is a powerful tool for Australian business owners looking to invest in new equipment while preserving cash flow. Whether you need a chattel mortgage, finance lease, or hire purchase, choosing the right financing option can make a big difference in your bottom line. With Tradiespace’s loan tool, you can compare multiple lenders and find the best rates in minutes, ensuring you make a smart, informed decision for your business.
Ready to explore your options? Try our loan tool today and discover how easy it is to find the perfect equipment finance solution for your business.
