Equipment and Vehicle Finance in Australia: A Complete Guide
Buying equipment or a vehicle outright can put real strain on a business's cash flow, especially when that cash could otherwise be used for stock, staff, marketing, or simply keeping the lights on. That's where equipment and vehicle finance options come in. Rather than paying the full purchase price upfront, businesses can spread the cost over time while still putting the asset to work from day one.
Whether you're a tradie eyeing a new ute, a café owner upgrading kitchen equipment, or a logistics business expanding its fleet, understanding how equipment and vehicle finance works, and what lenders actually look for, can make the difference between a smooth application and a frustrating one. This guide walks through what can be financed, how the main finance structures differ, who's typically eligible, what documents are usually needed, and the costs worth understanding before you apply. Browse more guides on our business finance blog.
What Is Equipment and Vehicle Finance?
Equipment finance is a type of business finance used to acquire tools, machinery, or other physical assets a business needs to operate, without paying the full cost upfront. Instead, the cost is repaid over an agreed term, often with the asset itself used as security for the loan.
Vehicle finance works on a similar principle but applies specifically to cars, vans, utes, trucks, and other business-use vehicles. In many cases, vehicle finance and equipment finance use the same underlying structures (such as a chattel mortgage or hire purchase), so the two are often grouped together under the umbrella of asset finance.
The key idea behind both is simple: rather than tying up working capital in a single large purchase, a business makes regular repayments over time (weekly, fortnightly, or monthly) while using the asset to generate revenue. For a vehicle-focused take, see 10 benefits of financing a business vehicle instead of paying cash.
How Equipment and Vehicle Finance Works in Australia
In a typical arrangement, a lender either provides funds for the business to purchase the asset directly, or the lender purchases the asset and the business repays the lender over an agreed term. The structure used affects who legally owns the asset during the finance term, how GST and tax deductions are treated, and what happens at the end of the agreement.
Most equipment and vehicle finance in Australia is secured, meaning the asset being financed acts as collateral. This is different from an unsecured business loan, where no specific asset is tied to the finance. Loan terms commonly range from one to seven years, though this varies by lender, asset type, and the asset's expected useful life. Some agreements include a balloon or residual payment, a lump sum due at the end of the term, which can reduce regular repayments but should be planned for carefully.
What Can You Finance?
Equipment and vehicle finance can apply to a wide range of business assets, including:
- Excavators and earthmoving equipment
- Construction machinery
- Manufacturing equipment
- Medical and dental equipment
- Restaurant and hospitality equipment (ovens, fridges, coffee machines)
- IT and technology equipment (computers, servers, POS systems)
- Trucks, vans, utes and commercial cars
- Trailers and other business-use vehicles and machinery
Both new and used assets can generally be financed, though lenders often apply age limits or value requirements to used equipment and vehicles.
Types of Equipment and Vehicle Finance
There are several common finance structures used for equipment and vehicles in Australia. Each has different implications for ownership, tax treatment, and cash flow, so it's worth understanding the basics of each before deciding what might suit your business.
Chattel mortgage
The business owns the asset from the start of the agreement, while the lender registers a security interest over it (typically via the Personal Property Securities Register) until the loan is repaid. This structure is popular with businesses that want immediate ownership and may suit those accounting for GST on a cash basis, since the GST credit on the purchase can often be claimed upfront.
Equipment loan
A general term often used interchangeably with chattel mortgage. The business borrows funds to purchase equipment, with the equipment itself typically securing the loan. See our Business Equipment Loans page for more detail.
Finance lease
The lender purchases the asset and leases it to the business for an agreed term. The business doesn't own the asset during the lease but usually has the option to purchase it at the end via a residual payment, or return it. Lease payments may be tax deductible, though the business generally can't claim depreciation since it doesn't own the asset during the term. Confirm tax treatment with your accountant.
Hire purchase
A hybrid between a loan and a lease. The business hires the asset and makes regular payments, with ownership transferring only once all payments (including any final balloon amount) are made.
Commercial vehicle finance
This is less a distinct structure and more a way of describing vehicle-specific finance, which typically uses one of the structures above, most often a chattel mortgage or hire purchase. Explore Business Vehicle Loans for an overview of how we help.
The right structure depends on factors like whether your business wants immediate ownership, how you account for GST, whether you're likely to want to upgrade the asset during the term, and your accountant's advice on tax treatment for your specific circumstances.
For businesses looking beyond asset-specific funding, other forms of business finance may also be worth considering. For example, a secured line of credit can provide access to working capital for ongoing business expenses, depending on your circumstances and lender requirements.
Related finance products
- Business Equipment Loans — Funding for machinery and business assets
- Business Vehicle Loans — Finance for cars, vans, trucks and commercial vehicles
- Secured Line of Credit — Flexible revolving credit for cash flow
Who Can Apply for Equipment Finance?
Equipment and vehicle finance is available to a broad range of business structures, including established and newer businesses, sole traders, partnerships, companies, contractors, and self-employed applicants.
That said, eligibility, rates, and approval outcomes depend on the individual lender's criteria, the applicant's financial circumstances, and the asset being financed. Not every applicant or business type will qualify with every lender, and some lenders specialise in particular industries or business stages.
What Do Lenders Look For?
When assessing an equipment or vehicle finance application, lenders typically consider a combination of factors, such as:
- Business trading history
- Revenue and cash flow
- Credit history (business and, often, directors)
- Existing debts and liabilities
- Deposit or contribution amount, if applicable
- The type, age, and value of the asset
- The applicant's overall financial circumstances
- The business structure (sole trader, company, trust, etc.)
Every lender weighs these factors differently, and approval isn't guaranteed for any applicant. Lenders make individual assessments based on their own risk criteria.
What Documents Do You Need?
- Photo identification
- ABN/ACN details
- Business financial information
- Recent bank statements
- Tax returns or financial statements (for larger loan amounts or certain lenders)
- A quote or invoice for the asset being financed
- Details of existing liabilities or finance agreements
Some lenders offer "low-doc" options with reduced documentation requirements, though these can come with different terms. It's worth checking with your broker or lender exactly what's required for your specific situation. If you need help, contact our support team or apply online.
Equipment and Vehicle Finance for New Businesses
Newer businesses can still access equipment and vehicle finance, but lenders often assess these applications differently to those from more established businesses. With less trading history to draw on, lenders may place more weight on factors like the director's personal credit history, industry experience, the size of any deposit, or the type and resale value of the asset itself.
Some lenders have specific low-doc or start-up-friendly products, while others may require a longer trading history before considering an application. If you're a newer business, it's worth discussing your situation with a broker who understands which lenders are more flexible with limited trading history.
Equipment and Vehicle Finance With Bad Credit
Having a less-than-perfect credit history doesn't automatically rule out equipment or vehicle finance, but it does typically narrow the range of options available. Outcomes depend heavily on the severity and cause of the credit issue, your current financial position, the type and value of the asset, and individual lender criteria. Some lenders specialise in applications that mainstream banks may decline, though terms may differ accordingly.
If you have credit history concerns, it's worth being upfront when speaking with a broker, since this allows a more accurate match with lenders who may be better suited to your circumstances, rather than applying broadly and accumulating credit enquiries. Read our important information for general disclosures.
Equipment Finance Options Compared
| Finance option | What it is | Common use | Key consideration |
|---|---|---|---|
| Chattel mortgage | Business owns the asset from the start; lender holds a security interest until repaid | Businesses wanting immediate ownership for vehicles and equipment | May suit GST cash-accounting businesses; discuss tax treatment with your accountant |
| Finance lease | Lender owns the asset; business leases it with an option to purchase at the end | Businesses that may want to upgrade equipment regularly | Ownership isn't automatic; residual/balloon payment may apply at the end |
| Hire purchase | Business hires the asset and owns it once all payments are made | Businesses comfortable with ownership transferring at the end of the term | Ownership only transfers after the final payment |
| Commercial vehicle finance | Vehicle-specific finance, typically using a chattel mortgage or hire purchase | Cars, vans, utes, trucks and other business vehicles | Structure depends on ownership preference and tax advice |
Frequently Asked Questions
What is equipment finance in Australia?
Equipment finance is a type of business finance that allows a business to acquire machinery, tools, or other equipment without paying the full purchase price upfront, typically repaying the cost over an agreed term.
Can I finance a business vehicle?
Yes. Vehicle finance is available for cars, vans, utes, trucks, and other business-use vehicles, generally using structures such as a chattel mortgage or hire purchase.
Can a new business get equipment finance?
Newer businesses can apply for equipment finance, though lenders may assess these applications differently, often placing more weight on factors like director credit history or deposit size given limited trading history. Enquire to discuss pathways.
Can sole traders get equipment finance?
Yes, sole traders are generally eligible to apply for equipment and vehicle finance, alongside partnerships, companies, and other business structures, subject to individual lender criteria.
What documents are needed for equipment finance?
Commonly requested documents include photo ID, ABN details, bank statements, and a quote or invoice for the asset, though requirements vary by lender and loan size. Start with our application form when you're ready.
Can I get equipment finance with bad credit?
It may be possible, depending on the severity of the credit issue, your current financial position, and the asset involved. Some lenders specialise in applications that mainstream lenders may decline. A broker can help match you to suitable options.
How long does equipment finance take?
Timeframes vary by lender and the complexity of the application. Having documentation ready in advance can help avoid delays.
Can I finance used equipment?
Yes, many lenders finance used equipment and vehicles, though age and value limits may apply depending on the lender and asset type.
What is the difference between a chattel mortgage and a finance lease?
With a chattel mortgage, the business owns the asset from the start while the lender holds a security interest. With a finance lease, the lender owns the asset during the term, and the business typically has the option to purchase it at the end.
How much equipment finance can I get?
Borrowing capacity depends on the business's financial position, the asset's value, credit profile, and individual lender policies. There's no single fixed answer. Contact us to talk through realistic ranges.
Choosing the right equipment or vehicle finance option, and the right lender, can be time-consuming to navigate alone, particularly with so many structures and providers to compare. As your finance broker, My Biz Finance helps Australian business owners compare equipment and vehicle finance options from multiple lenders, so you can focus on running your business rather than researching fine print.
This article is general information only and does not constitute financial, tax, or legal advice. Tax treatment, interest rates, fees, and lending criteria vary by lender and individual circumstances. For related reading, see our guide to business loans for small businesses and invoice finance vs business loans.
If you're considering financing equipment, machinery, or a commercial vehicle, get in touch with My Biz Finance to discuss your options.
