What Is Equipment Finance? | How It Works | Equifund

What Is Equipment Finance?

Equipment finance is a type of commercial lending that allows businesses to purchase machinery, vehicles, and equipment by spreading the cost over time. Rather than paying the full purchase price upfront, businesses make regular repayments over an agreed term — typically 1 to 7 years.

In Australia, equipment finance covers everything from trucks and trailers to excavators, tractors, forklifts, CNC machines, and mining equipment. Finance brokers like Equifund Financial Group connect businesses with 80+ lenders to secure competitive rates.

How Does Equipment Finance Work?

1. Application: Apply through a lender or broker with details about the equipment and your business.
2. Assessment: The lender assesses creditworthiness and equipment value.
3. Approval: Pre-approval can be obtained in 24 hours through a broker.
4. Repayment: Regular repayments over the agreed term.
5. Ownership: Own from day one (chattel mortgage) or at end of term (lease).

Types of Equipment Finance

Chattel Mortgage

Immediate ownership with a mortgage over the asset. Interest and depreciation are tax-deductible. Most popular for GST-registered businesses.

Finance Lease

The lender owns the equipment and leases it to the business. Lease payments are 100% tax-deductible.

Hire Purchase

Hire the equipment with an option to purchase at the end. Interest payments are tax-deductible.

Equipment Finance Rates in Australia

Rates typically range from 4.5% to 14% per annum depending on credit profile, equipment type and age, deposit, and loan term.

What Equipment Can Be Financed?

• Transport: Trucks, trailers, prime movers, vans
• Construction: Excavators, dozers, loaders, cranes, telehandlers
• Agriculture: Tractors, harvesters, headers, balers
• Mining: Dump trucks, drill rigs, crushers
• Manufacturing: CNC machines, lathes, welding equipment
• Logistics: Forklifts, pallet jacks, conveyor systems

Benefits of Equipment Finance

• Preserves cash flow: Spread costs instead of large upfront payments
• Tax advantages: Interest, lease payments, and depreciation may be deductible
• Access better equipment: Finance higher-quality assets
• Fixed repayments: Budget with certainty

Frequently Asked Questions

What is the minimum amount for equipment finance?

Most providers have a minimum of $10,000 to $20,000. Some will finance equipment as low as $5,000.

Can start-ups get equipment finance?

Yes. Some lenders offer finance to start-ups with as little as 6 months trading history.

Is equipment finance tax-deductible?

Yes, in most cases. Under chattel mortgage, interest and depreciation are deductible. Under finance lease, the full payment is deductible. Consult your accountant.