Asset Finance Australia: The Complete Business Owner's Guide
Asset finance is funding used to acquire a business asset, such as a vehicle or piece of equipment, where the asset itself generally acts as security for the facility. Repayments are structured over an agreed term, and ownership at the end depends on the structure you choose, such as a chattel mortgage, finance lease or rental.
For most Australian businesses, the right equipment, vehicle or machinery is what keeps operations moving. Paying the full cost upfront can tie up cash that is better used elsewhere. Asset finance lets you put the asset to work while spreading the cost over its useful life. This guide explains how asset finance works in Australia, the structures available, who can apply, and how a broker with a panel of over 70 lenders helps you find the right fit.
How Asset Finance Works in Australia
Asset finance uses the asset you are purchasing as security for the facility. Because the lender holds an interest in the asset, the structure is generally more competitive than an unsecured loan, and the lender can offer terms that reflect the asset's value and useful life.
Repayments are scheduled over a term that suits the expected life of the asset, often between two and seven years depending on what you are financing. This aligns the cost of the finance with the period the asset is generating income for the business, so the asset helps pay for itself over time.
Ownership at the end of the term depends on the structure. With a chattel mortgage or commercial hire purchase you own the asset once the final payment is made, while a finance lease may give you the option to purchase, return or refinance the asset.
What You Can Finance with Asset Finance
Asset finance covers a broad range of equipment and vehicles used in Australian businesses. If the asset has a clear value and useful life, there is likely a lender willing to consider it.
Finance Structures Compared
The most common asset finance structures in Australia are compared below. Each has different implications for ownership, accounting and GST.
| Structure | Who owns the asset | Balance sheet treatment | GST treatment | Best suited to |
|---|---|---|---|---|
| Chattel Mortgage | You own the asset from the start | Asset and loan appear on the balance sheet | GST may be claimed upfront on the purchase price | Businesses wanting ownership and GST flexibility |
| Finance Lease | Lender owns the asset, you lease it | Generally recorded as a lease liability | GST charged on the monthly lease payments | Businesses wanting to preserve working capital |
| Operating Lease | Lender owns the asset, you use it | Typically off balance sheet | GST charged on the rental payments | Businesses wanting asset use without ownership |
| Rental | Lender owns the asset, you rent it | Treated as an operating expense | GST charged on the rental payments | Businesses wanting flexibility to upgrade assets |
Tax treatment depends on your individual circumstances and should be confirmed with your accountant or tax adviser.
Who Can Apply for Asset Finance
Asset finance is available to a range of Australian business structures, including sole traders, companies, trusts and partnerships. Your business structure affects which lenders and products are available to you.
Why Use a Broker for Asset Finance
Rather than approaching a single bank, a broker compares options across a panel of over 70 lenders. That gives you a wider range of structures, terms and lenders than you would see going direct. If you are weighing a broker against your bank, read our guide on using a broker versus going direct.
How to Apply for Asset Finance in Australia
The application process is broadly the same across lenders, though the detail varies. For equipment finance for sole traders and larger companies alike, the steps below outline what to expect.
- 1Identify the asset and its cost
- 2Determine your business structure and GST position
- 3Choose a finance structure
- 4Submit an application
- 5Receive credit approval
- 6Settlement
- 7End of term
Need to prepare? See our guide on the documents you need for asset finance, and our comparison of new versus used equipment finance.
Frequently Asked Questions
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