Equipment Finance - Rates from 6.59%

All three structures achieve the same outcome (you get the equipment, you make repayments) but differ in ownership timing, tax treatment, and end-of-term options. Understanding the differences can save thousands in tax over the life of the loan.

A chattel mortgage transfers ownership to you at settlement. The lender registers a mortgage over the asset as security. You claim GST credits on the purchase price immediately, depreciate the asset from day one, and deduct interest as a business expense. This is the most common structure for GST-registered businesses.

A hire purchase means you hire the asset with a commitment to buy it after the final payment. Ownership transfers at the end of the term. You can still depreciate the asset and deduct interest, but GST treatment differs slightly. For a detailed comparison, see our guide to hire purchase vs chattel mortgage.

A finance lease means you lease the asset for a fixed term. Lease payments are fully tax-deductible as an operating expense. At the end of the lease, you can purchase the asset at its residual value, return it, or refinance. Leases keep the asset off your balance sheet, which can preserve borrowing capacity for other purposes.

For a deeper look at commercial hire purchase specifically, including worked cost examples and balloon payment scenarios, see our dedicated guide.

Equipment finance rates through our panel start from 6.59%. The rate you're offered depends on your business profile, the asset, and the structure you choose.

Five factors determine your rate:

1. Asset type and age. New equipment from authorised dealers attracts the lowest rates. Used equipment under 5 years old is close behind. Older assets or niche equipment carry higher rates because resale value is less certain.

2. Your business profile. Lenders look at ABN age, annual turnover, and industry. Businesses trading for 2+ years with consistent revenue get the best pricing. Start-ups and businesses under 12 months old can still access finance, often through low-doc pathways at slightly higher rates.

3. Credit history. Clean credit history gets the sharpest rates. Past defaults or judgements don't disqualify you, but specialist lenders typically charge 2-4% more than prime rates.

4. Loan-to-value ratio. A deposit (even 10-20% of the purchase price) reduces the lender's exposure and can shift you into a better rate tier. On a $100,000 asset, a $10,000 deposit can save thousands in interest over the term.

5. Term length. Shorter terms often attract lower rates. The difference between 6.59% and 12% on a $100,000 asset over five years is $15,900 in extra interest.

For current rate bands and worked examples, see our guide to equipment finance rates.

Equipment finance offers up to four separate tax benefits that can return a significant portion of the asset's cost over the loan term. On a $100,000 asset financed under a chattel mortgage, those benefits can return more than $31,000 over five years.

GST credits. If your business is GST-registered, you can claim the GST component of the purchase price on your next BAS. On a $100,000 asset (GST-inclusive), that is $9,091 back within weeks. For passenger vehicles, the credit is capped at $6,334 (based on the ATO car depreciation limit of $69,674 for 2025-26).

Depreciation. You can depreciate the asset's cost base over its effective life. Small businesses with turnover under $10 million can use the instant asset write-off for assets costing less than $20,000, deducting the full cost in the year you first use the asset. The $20,000 instant asset write-off is now permanent from 1 July 2026.

Interest deductions. Interest paid on equipment finance is tax-deductible as a business expense. On a $100,000 loan at 8% over five years, total interest is roughly $21,700. At the 25% small business tax rate, that saves around $5,425.

Lease payment deductions. Under a finance lease, the entire lease payment (not just interest) is deductible as an operating expense.

For worked examples across all structures and depreciation methods, see our guide to equipment finance tax benefits. Always consult your accountant for advice specific to your situation.

Equipment finance through Emu Money covers almost any tangible business asset with identifiable resale value. The asset itself serves as security, so no additional collateral is needed.

Construction and earthmoving: Excavators, loaders, cranes, bobcats, concrete pumps. These attract strong lender appetite due to established resale markets.

Commercial vehicles: Cars, vans, utes, trucks and trailers for business use. Vehicle finance often settles fastest because lender valuations are straightforward.

Manufacturing and production: CNC machines, 3D printers, production lines, welding equipment, compressors. Lenders assess the asset's useful life and resale value.

Technology and IT: Servers, networking equipment, commercial software licences, and point-of-sale systems. Technology assets may attract shorter maximum terms (3-5 years) given faster depreciation.

Medical and dental: Diagnostic machines, surgical tools, dental chairs, patient monitoring systems. Medical equipment attracts competitive rates due to the stability of healthcare practices.

Hospitality and retail: Commercial kitchens, refrigeration, coffee machines, shop fit-outs. Fit-out finance may require additional security for items that become fixtures.

Agricultural: Tractors, harvesters, irrigation systems, grain storage. Seasonal repayment structures are available to match farming cash flow cycles. See our dedicated farm equipment finance page for more.

Renewable energy: Solar panels, battery storage, and energy management systems for commercial premises.

A balloon payment (also called a residual value) is a lump sum due at the end of your loan term. It reduces your regular repayments during the term but means you owe a larger amount at the end.

On an $80,000 chattel mortgage at 8% over five years:

• No balloon: $1,622/month, $0 owing at end
• 20% balloon ($16,000): $1,362/month, $16,000 owing at end
• 30% balloon ($24,000): $1,232/month, $24,000 owing at end

The 30% balloon saves $390 per month in cash flow but you need to fund $24,000 at the end of five years. Options at that point include paying cash, refinancing the balloon amount, or selling the equipment to cover it.

Balloon payments make sense when the equipment retains strong resale value (vehicles, heavy machinery) and you want lower monthly outgoings to preserve working capital. They're less suitable for technology or equipment that depreciates quickly, where the balloon may exceed the asset's value at term end.

For the ATO, a balloon payment on a chattel mortgage or hire purchase doesn't change your depreciation entitlements. You still depreciate the full cost base from day one.

If your business is under 2 years old, or you don't have up-to-date financial statements, low doc equipment finance lets you apply with reduced paperwork. Several lenders on our panel offer low doc pathways for equipment purchases.

Instead of full financial statements and tax returns, low doc applications typically require:

• 6 to 12 months of business bank statements
• Valid ABN (usually 6+ months registered)
• Driver's licence or passport
• Quote or invoice for the equipment

Lenders assess your application based on bank statement conduct rather than formal financials. They look for consistent monthly deposits (most want at least $7,500/month), stable balances, and no patterns of overdrawing or dishonour fees.

Low doc rates are typically 1-3% higher than full doc rates. On a $100,000 asset over five years, that gap costs roughly $5,800 in additional interest. If your financials will be ready within a few months, it may be worth waiting. If the equipment purchase is time-sensitive (a specific machine available now, or a contract that requires capacity), the rate premium is often justified.

For the full low doc process and how to strengthen your application, see our guide to low doc equipment finance.

Equipment finance rates are priced for risk. Stronger business profiles and lower-risk assets attract sharper rates. Here's how to optimise your position before applying.

Get a dealer or manufacturer quote. Lenders offer better rates on new equipment from authorised dealers than on private sales. A formal quote with the dealer's ABN speeds up the approval process.

Clean your bank statements. Lenders review 3-6 months of transaction history. Avoid dishonour fees, gambling transactions, and persistent low balances in the months before applying. Consistent deposits and healthy average balances signal a well-managed business.

Offer a deposit. Even 10-20% of the purchase price reduces the loan-to-value ratio and can unlock a lower rate tier. On a $150,000 excavator, a $15,000 deposit might save $3,000+ in total interest.

Choose the right term. Shorter terms attract lower rates on many lender products. Match the term to the asset's useful life rather than stretching to the maximum.

Apply through a broker. A single-lender application gives you one rate. Applying through Emu Money compares your profile against 50+ lenders simultaneously, surfacing the best available rate for your specific situation and asset type.