The Complete Guide to Asset Finance in Australia

Asset finance allows businesses to spread the cost of equipment and vehicles over time, preserving cash for operations. Unlike traditional loans, the asset itself typically serves as security, often eliminating the need for property collateral. The market offers several structures, each with different ownership, tax, and cash flow implications, making it important to choose the right option for your situation.

A chattel mortgage is the most popular equipment finance structure in Australia, accounting for approximately 65% of business vehicle finance. You borrow funds to purchase the asset and take immediate ownership, with the equipment serving as security. This structure allows you to claim GST credits upfront and depreciate the asset, making it particularly tax-effective for GST-registered businesses. Interest rates typically range from 7-11% p.a. with terms of 1-5 years.

With a finance lease, the lender purchases the asset and leases it to your business for an agreed term. You make regular lease payments but the lender retains legal ownership during the lease period. At the end of the term, you can upgrade to new equipment, return the asset, or purchase it for a pre-agreed residual value. This structure suits businesses wanting flexibility and predictable payments without seeking immediate ownership.

An operating lease is essentially a rental arrangement where you use the asset without intending to own it. The asset is returned at lease end, making this ideal for equipment that may quickly become outdated. Commercial hire purchase involves paying instalments with ownership transferring after the final payment. Both structures offer predictable payments, with hire purchase suited to businesses wanting eventual ownership through structured payments.

Equipment finance rates currently range from 6.50-11% p.a. for chattel mortgages and 8-12% p.a. for finance leases. Truck finance for prime borrowers sits around 7-10% p.a. Established businesses with good credit often access 100% financing with no deposit required. Newer businesses or those without property ownership typically need 10-20% deposit. Factors affecting your rate include time in business, credit history, asset type, and whether directors own property.

The instant asset write-off threshold for 2025-26 is $20,000 per asset for businesses with turnover under $10 million. GST treatment varies by structure: chattel mortgages and hire purchase allow full GST credit upfront, while leases claim GST progressively with each payment. The car depreciation limit is $69,674 for 2025-26. Electric vehicles under the luxury car tax threshold ($91,387) qualify for FBT exemption through novated leases, though plug-in hybrids are no longer eligible for new leases from April 2025.

We arrange finance for trucks, trailers, and commercial vehicles across all major brands. Construction equipment including excavators, loaders, and cranes. Agricultural machinery such as tractors, harvesters, and irrigation systems. Manufacturing equipment, forklifts, and technology assets. Medical, dental, and hospitality equipment. Both new and used assets can be financed, with terms and rates varying based on asset type and age.

The optimal structure depends on your business circumstances, tax position, and usage requirements. Choose chattel mortgage or hire purchase if you want ownership and maximum tax benefits. Opt for a finance lease if you value flexibility and predictable payments without upfront ownership. Consider an operating lease for assets that may become outdated or when you want to upgrade regularly. Consult your accountant to understand the specific implications for your situation.