Cars and commercial vehicles
Business-use cars, utes, vans and other eligible vehicles may be financed.
Business & Commercial
Asset & Equipment Finance
Asset finance can help businesses acquire vehicles, machinery, plant and equipment without necessarily paying the full purchase price upfront. The right structure depends on the asset, business cash flow, loan term, deposit, residual or balloon and lender policy.
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What is asset finance?
Asset finance is lending used to purchase or refinance business-use vehicles, machinery, plant, equipment and other eligible assets.
The asset being financed commonly forms part of the lender's security, which can make asset finance different from a general unsecured business loan.
Asset finance can be structured in several ways depending on the business, asset, ownership requirements, tax treatment and desired repayment structure.
What can be financed?
A wide range of business assets may be eligible for finance depending on the lender and asset type.
Trucks and trailers
Heavy vehicles, prime movers, trailers and transport equipment can be financed through specialist commercial lenders.
Construction equipment
Excavators, loaders, cranes, earthmoving equipment and other construction assets may be eligible.
Agricultural machinery
Tractors, harvesters and other farm equipment can be financed depending on the lender and business.
Manufacturing equipment
Production machinery, industrial equipment and specialised plant may be financed.
Office and technology equipment
Some lenders may finance eligible technology, medical, office or professional equipment.
Why businesses use asset finance
Purchasing an asset outright can place a significant demand on business cash flow.
Asset finance can allow the cost to be spread over an agreed term while the asset is being used to generate business income.
This can help preserve working capital for other business requirements, although the overall cost of the finance, repayment structure and asset value should still be considered.
Common reasons to finance an asset
Asset finance can support both day-to-day operations and business growth.
Preserve cash flow
Financing can reduce the amount of business cash required upfront.
Replace ageing equipment
Businesses may finance replacement assets when existing equipment becomes unreliable or inefficient.
Support business growth
New vehicles or equipment may help increase capacity or allow the business to take on additional work.
Upgrade technology
Finance may assist with replacing outdated equipment with newer technology.
Match repayments to useful life
The finance term can often be structured around the expected useful life of the asset.
Manage capital expenditure
Financing may allow a business to plan major purchases without using a large amount of available cash.
Common asset finance structures
Different structures can affect ownership, repayment profile and accounting or tax treatment.
Chattel mortgage
The business generally owns the asset while the lender takes security over it until the finance is repaid.
Finance lease
The lender or finance provider owns the asset during the lease term, with agreed payments made by the business.
Commercial hire purchase
The business hires the asset over the agreed term and ownership may transfer after the required payments are completed.
Equipment loan
A loan may be secured against the financed equipment depending on the lender and transaction.
Do you need a deposit?
Some asset finance transactions may be available with little or no deposit, while others may require an upfront contribution.
The amount required can depend on the age and type of asset, purchase price, business strength, loan term and lender policy.
Contributing a larger deposit can reduce the amount financed and the total interest cost, but it also uses more of the business's available cash.
What is a balloon or residual payment?
Some asset finance facilities can include a balloon or residual amount at the end of the loan term.
This reduces the regular repayments because part of the loan principal is deferred until the end of the facility.
A larger balloon can improve short-term cash flow, but it also means a larger amount remains owing at the end and generally increases the total interest paid.
Choosing a balloon payment
A balloon should be considered as part of the complete finance structure rather than simply as a way to reduce monthly repayments.
Lower regular repayments
Deferring part of the principal can reduce the amount paid during the loan term.
Higher final payment
The outstanding balloon must generally be paid, refinanced or otherwise dealt with when the facility ends.
Total interest
Because more principal remains outstanding for longer, a balloon can increase the total interest cost.
Future asset value
The expected value of the asset at the end of the term may be relevant when choosing the balloon amount.
New or used equipment?
Finance may be available for both new and used assets, but lender policy can differ depending on the age, condition and expected useful life of the equipment.
Older or specialised equipment may attract shorter terms, larger deposits or different lender requirements.
For some assets, the lender may also consider resale value and whether there is an established secondary market.
What will an asset lender assess?
The assessment generally considers both the business and the asset being financed.
Business history
The lender may consider how long the business has operated and its trading performance.
Business cash flow
Revenue, profitability and account conduct may help demonstrate repayment capacity.
Asset type
Mainstream vehicles and equipment may be easier to finance than highly specialised assets.
Asset age
Older equipment may affect the maximum loan term or required deposit.
Purchase price
The lender may review the invoice or sale contract and compare the price with the asset's expected value.
Existing commitments
Other business loans, asset finance and financial obligations may form part of the assessment.
What documents may be required?
Asset finance can sometimes be relatively streamlined, but requirements depend on the transaction.
Asset invoice or purchase order
The lender will generally require details of the asset and purchase price.
Business identification
ABN, company details and information about directors or business owners may be required.
Bank statements
Some lenders may assess recent business statements to review turnover and account conduct.
Financial statements
Larger or more complex transactions may require business financial statements.
Tax returns
Depending on the lender and transaction, tax returns may be requested.
Existing loan information
Current debts and asset-finance commitments may need to be disclosed.
Interest rate is only part of the cost
Asset finance should be compared on more than the quoted interest rate.
Establishment fees, brokerage charges, loan term, deposit, balloon amount, early repayment conditions and the total amount financed can all affect the overall cost.
A lower rate may not provide the lowest total cost if the facility has higher fees or a structure that keeps more debt outstanding for longer.
What should be compared between asset lenders?
The complete repayment structure matters.
Interest rate
Compare the rate and the expected interest cost over the full loan term.
Establishment fees
Upfront lender and transaction fees should be included in the overall comparison.
Loan term
Longer terms reduce repayments but can increase total interest.
Deposit
A larger contribution reduces borrowing but uses more business cash upfront.
Balloon or residual
The final payment can materially change both regular repayments and total cost.
Early repayment conditions
Some facilities may have fees, interest adjustments or other conditions if repaid early.
Refinancing existing equipment
Existing vehicles or equipment may sometimes be refinanced where there is sufficient value and the transaction meets lender requirements.
Refinancing may be considered to restructure repayments, release equity from eligible assets, consolidate suitable facilities or move to a different lender.
The remaining term, asset age, payout amount, refinancing costs and total future interest should all be considered.
Why lender selection matters
Asset lenders can specialise in different industries, asset types and transaction sizes.
Asset appetite
Some lenders are particularly strong in vehicles, heavy equipment, agriculture, construction or specialised machinery.
Asset age
Maximum acceptable age and loan term can vary between lenders.
Documentation
Some lenders can provide streamlined assessment while others require full financial information.
Business profile
Newer businesses and established businesses may have access to different lending options.
Balloon policy
Maximum balloon amounts can vary based on asset type, age and term.
Pricing and fees
Rates and establishment costs can differ considerably between lenders.
How I compare asset and equipment finance
My role as a mortgage and finance broker is to compare the complete transaction rather than simply finding the lowest advertised rate.
That means considering the asset, purchase price, deposit, loan term, balloon, repayment structure, lender fees and the financial position of the business.
The goal is to structure the finance so it supports the business while keeping the overall cost and future obligations clear.
A typical asset finance journey
Asset finance can often be arranged relatively quickly where the transaction and documentation are straightforward.
- 1
Identify the asset
Confirm the asset, purchase price, supplier and required settlement timeframe.
- 2
Review the business position
Assess business history, cash flow, existing commitments and available deposit.
- 3
Choose the finance structure
Consider the loan term, deposit, repayment type and any balloon or residual amount.
- 4
Compare lenders
Identify lenders whose asset appetite, pricing and documentation requirements suit the transaction.
- 5
Application
Provide the asset and business information required for assessment.
- 6
Approval
Review the approved loan amount, rate, fees, term and repayment structure.
- 7
Settlement
The lender completes the finance documentation and funds the asset purchase.
Asset and equipment finance questions
What assets can a business finance?
Depending on the lender, eligible assets may include cars, commercial vehicles, trucks, machinery, construction equipment, agricultural equipment and other business-use assets.
Do I need a deposit for equipment finance?
Not always. Deposit requirements depend on the asset, business, loan amount and lender policy.
Can I finance used equipment?
Yes, subject to lender requirements. Asset age and condition can affect the available loan term and structure.
What is a chattel mortgage?
A chattel mortgage is a common commercial finance structure where the business generally owns the asset and the lender holds security over it until the loan is repaid.
What is a balloon payment?
A balloon is an amount left outstanding at the end of the loan term. It reduces regular repayments but increases the final amount that must be repaid or refinanced.
Can a new business obtain asset finance?
Potentially. Lender options may be more limited and additional deposit, documentation or guarantees may be required.
Can I pay asset finance out early?
Usually, although early payout calculations, fees or interest adjustments can apply depending on the facility.
Can I refinance existing machinery or vehicles?
Potentially. Refinancing depends on the asset value, age, existing payout and lender requirements.
How long can equipment finance run for?
Loan terms vary according to asset type, age, expected useful life and lender policy.
Is asset finance tax deductible?
Tax treatment depends on the finance structure and business circumstances. Tax and accounting advice should be obtained from a qualified accountant or tax adviser.