Quick answer
Equipment finance funds vehicles, machinery and tools, with the equipment itself as security. Because the lender can recover the asset, equipment finance is often easier to get than an unsecured loan when credit is bruised or trading history is short. Lenders assess the asset's value and resale market, your business and credit, and sometimes ask for a deposit. Common structures include chattel mortgages and finance leases.
Key points
- The equipment secures the loan, which helps when credit is weak.
- Standard assets with strong resale markets are easiest to fund.
- A deposit or trade-in can turn a decline into an approval.
- Check the PPSR before buying any used equipment privately.
- Security
- The equipment itself
- Common assets
- Utes, trucks, plant, machinery
- Helps approval
- Deposit or trade-in
- Credit check to enquire
- None
Some of the most useful money a difficult file can get is equipment finance. Because the loan is secured on the asset you’re buying, the lender has something tangible to rely on, so bad credit, a short trading history or a past decline matters less than it would for an unsecured loan. For tradies, transport operators, farmers, builders and manufacturers, it’s often the first approval that gets the business moving again.
What you can finance
| Category | Examples |
|---|---|
| Vehicles | Utes, vans, light trucks, prime movers, trailers |
| Construction and earthmoving | Excavators, loaders, bobcats, rollers, tippers |
| Agricultural | Tractors, headers, sprayers, balers |
| Manufacturing and workshop | CNC machines, presses, compressors, hoists |
| Hospitality and retail | Commercial kitchens, refrigeration, POS systems |
| Medical and professional | Practice equipment, specialised technology |
Assets with established resale markets, such as utes, trucks and common machinery, are the easiest to fund. Highly specialised or custom equipment can be harder, because the lender has fewer ways to recover its value.
How asset lenders assess difficult files
- The asset. Its age, condition, value and how easy it would be to sell.
- The deal. New or used, dealer or private sale, and whether there’s a deposit or trade-in.
- Your business. What the equipment will do, and how it will earn the repayments.
- Your credit. Considered, but often with more flexibility than unsecured lending.
- Your history. Experience in the industry counts, even if your current ABN is new.
Improving your chances
- Put in a deposit. Even a modest one reduces the lender’s risk.
- Trade in an existing asset. The equity counts like a deposit.
- Choose standard equipment with strong resale value where you can.
- Show the work. Contracts, customers or quotes that need the equipment.
- Explain your credit. A short note on any defaults or past issues.
Chattel mortgage, lease or hire purchase?
There are several structures, and the right one depends on how you want to own the asset and how your accountant wants it treated for tax and GST. A chattel mortgage is common for businesses that want to own the asset from day one. Finance leases and hire purchase work differently. It’s worth a quick conversation with your accountant before choosing.
Buying used or privately
Used equipment and private sales are financeable, but do your homework. Search the Personal Property Securities Register before you buy, to make sure there’s no finance owing to someone else on the asset. A lender may also want an inspection or an independent valuation.
Equipment finance as the first step back
For a business recovering from a tough period, equipment finance can be the first clean approval. Make the repayments on time and it becomes a track record that helps with the next loan. Many of our clients start with a vehicle or machine, then add a line of credit once their file has recovered.
An illustrative example
A Townsville landscaping and earthworks business (illustrative only) needed a $95,000 used excavator to take on a council maintenance contract. The owner had an unpaid default from a previous business and only eight months of trading under the current ABN. An unsecured lender declined. An asset lender approved a chattel mortgage, with a trade-in of an older bobcat as a deposit, a PPSR search on the excavator, and a copy of the council contract. The machine was working on the new contract within the week.
Questions to ask before you sign
Equipment finance documents can look similar, but the details differ between lenders. Before you sign, ask:
- What’s the total amount repayable in dollars, including all fees?
- Is there a balloon or residual payment at the end, and how much is it?
- Can I repay early, and what does it cost?
- What insurance does the lender require on the asset?
- What happens if the equipment is damaged, stolen or written off?
- Can I sell or upgrade the asset during the term?
A balloon can lower your regular repayments, but you’ll need to pay or refinance it at the end. Make sure that fits your plans for the asset, especially for equipment that loses value quickly.
When equipment finance isn’t enough
Sometimes the equipment is only part of the cost. Delivery, fit-out, training and the working capital to get a new contract going can add up. A sensible structure might pair equipment finance for the machine with a line of credit or short-term loan for the rest. See also transport and construction for industry-specific needs.
Get the equipment working
If you need a vehicle or machine and lenders keep saying no, send us a 60-second enquiry. There’s no credit check when you first enquire, your details aren’t scattered across the market, and a real person will match you with an asset lender that fits your file. Please be accurate about the equipment, the price and any deposit or trade-in on the form. See if you qualify.
Frequently asked questions
Can I get equipment finance with bad credit?
Often, yes. Because the lender can repossess and sell the equipment, some asset lenders are more flexible on credit than unsecured lenders. A deposit, a trade-in or a strong recent trading record improves your chances.
What's a chattel mortgage?
It's a common way to finance business equipment and vehicles. You own the asset from the start, and the lender takes security over it until the loan is repaid. Your accountant can explain the tax and GST treatment for your business.
Can I finance used equipment or a private sale?
Yes, many lenders will, though they may want an inspection or valuation and a PPSR search to confirm no-one else has a security interest over it.
Does the instant asset write-off affect my decision?
It may affect the tax treatment of the purchase. Eligibility and thresholds depend on the rules for the relevant income year, so check with your accountant rather than buying for the tax break alone.