Quick answer
Equipment finance is funding used to buy or use business equipment, such as vehicles, machinery, tools or IT, with repayments spread over time and the equipment itself usually acting as security. In Australia it comes in four main forms: chattel mortgage, hire purchase, finance lease and operating lease. They differ on who owns the asset, how GST is claimed and whether a balloon is owed at the end.
Key points
- The equipment is normally the security, so property often isn't needed
- Four common structures: chattel mortgage, hire purchase, finance lease and operating lease
- Ownership decides who can claim depreciation or an instant asset write-off
- A balloon lowers regular repayments but leaves a lump sum due at the end
Equipment finance is money used to acquire the gear a business runs on, from a ride-on mower to a CNC machine, paid back over a set term. What makes it distinct from a general business loan is that the item being bought is normally the lender’s security. Should the loan go unpaid, the funder’s first port of call is that machine, not your house or your other business assets.
Because the asset carries much of the risk, this is a mainstream way for smaller Australian firms to borrow. In the RBA’s October 2025 small business Bulletin, roughly half of the smaller SME loans it looked at were backed by things like vehicles and equipment rather than a home, and the same article pointed out how many non-bank funders focus on this kind of lending.
The four main structures
“Equipment finance” is an umbrella. Four products sit under it, and while their quotes can look alike, each one lands differently in your accounts.
| Structure | Legal owner during the term | GST treatment | What happens at the finish |
|---|---|---|---|
| Chattel mortgage | Your business, from settlement | Claimed upfront on the price | Pay any balloon and the lender’s charge is released |
| Hire purchase | Financier, until you make the final instalment | Generally claimed upfront | Ownership passes on the final instalment |
| Finance lease | The financier (lessor) | Charged on each rental | Pay the residual, refinance it or trade the asset |
| Operating lease | The financier | Charged on each rental | Hand the asset back |
The lender records its interest on the PPSR in every case. That registration is what protects its claim if the business fails or the equipment is sold.
Why the structure matters at tax time
Owning the item usually means your business claims depreciation plus the interest portion of each repayment. For firms with aggregated turnover below $10 million, the instant asset write-off has let each qualifying item under $20,000 be deducted in one year, and laws passed in August 2026 keep that $20,000 limit running from 1 July 2026. With a lease, the lessor owns the asset, so you generally claim the lease payments as they fall due instead. Which suits you depends on your profit, cash position and plans for the asset, so get your accountant’s view before you sign anything.
Need gear before the next job starts? Tell us what you’re buying and we’ll come back with options.
Worked example: a landscaper’s loader
A landscaping business wants a $68k compact track loader. It has two years of trading and steady council contracts, but no spare property to offer as security.
It chooses a five-year chattel mortgage with a 20% balloon:
- The business owns the loader from settlement and claims the GST on the purchase in its next BAS.
- The funder records its claim against the loader on the PPSR.
- Because $13,600 is deferred to the balloon, monthly repayments are noticeably lower than on a loan that fully repays.
- At the end of year five, the owner pays the $13,600, refinances it, or trades the loader in.
The balloon helps cash flow now, but it isn’t free money: interest runs on that $13,600 for the whole term. Run both versions through the equipment finance calculator and compare the total dollars repaid, not just the monthly figure. Landscapers weighing other funding can also look at our landscaping industry page.
Related terms
Chattel, residual value, balloon payment, security interest and asset-backed lending.
Ready to put new equipment to work?
The right machine can pay for itself, but only if the finance behind it fits how the business earns. Whether it’s a single ute or a yard full of plant, our equipment finance page covers the detail, and our team can find a structure that suits. Sending an enquiry is roughly a sixty-second job and your credit file isn’t touched for asking. We keep what you tell us in-house instead of firing it off to a long list of funders, and one of our people looks at it properly, then rings you. Note the supplier, the item and its price exactly so our first suggestion lands.
Frequently asked questions
Do I need property to get equipment finance?
Usually not. The lender takes security over the equipment and registers its interest on the PPSR. Newer businesses or unusual assets may be asked for a deposit or extra security, but many deals are done with the asset alone.
Can I finance second-hand equipment?
Yes, many lenders fund used vehicles and machinery, including private sales. Older or highly specialised gear may attract a shorter term or a larger deposit because it's harder to resell.
Can I still use the instant asset write-off if I finance the equipment?
Where you own the asset, as with a chattel mortgage or hire purchase, the write-off is based on the asset's cost, not on how you paid. Leased equipment isn't yours, so the lessee claims the lease payments instead. Your accountant can confirm the current threshold and your eligibility.
What's the difference between equipment finance and asset finance?
They're used almost interchangeably. Asset finance is the broader label and can include vehicles, trucks and even some intangible assets, while equipment finance usually refers to physical plant, tools and machinery.
How quickly can equipment finance be approved?
Straightforward deals for established businesses are often approved within a day or two, especially where the supplier invoice and recent financials are ready. Larger amounts or specialised gear take longer.