How Much Equipment Financing Can I Get?


When it comes to financing equipment for your business, there are four main options available. Deciding which one is best suited for your needs depends on what type of equipment you need to purchase and the extent of its use. In this article, we’ll break down the types of equipment loans you can get and how much you can expect to acquire through each loan type.

Equipment Financing Options in Australia

There are four standard equipment finance options you can choose when applying for a loan. The loan type you receive depends on the amount of interest you pay and its term length.

Asset Lease

An asset lease goes towards purchasing business equipment, but you need to use it specifically for company use. Companies need to pay the financier a scheduled monthly payment for a set lease term. When the term ends, you have the option to pay the residual amount, giving you full ownership of the equipment, or refinance and pay it off under another, likely stricter and interest-heavy, term.

Chattel Mortgage

With a chattel mortgage, the customer immediately becomes the owner of the equipment after it’s purchased. The financier basically takes out a secured mortgage over the equipment as collateral through registering interest with the Personal Properties and Securities Register. When the contract is finished and the loan is paid, the financier takes away the interest rate, and the customer takes the title.

Cashflow Funding

Cashflow funding uses future money, typically from invoices you haven’t paid yet, to securely borrow the piece of equipment. Businesses that operate in an industry with payment terms longer than 3 months can use future revenue to help the company immediately instead of waiting for actual cash flow. However, interest rates are often much higher than other options.

Equipment Rental

Similar to an asset least, equipment rental financing allows the customer to purchase the equipment outright as long as the customer commits to a set of fixed monthly payments. When the contract is complete, the customer truly owns the equipment. What separates asset leasing from equipment rentals is that the rental isn’t seen as business debt, liability, or asset.

What Determines the Amount of Financing I Receive?

The amount of financing you receive as a business depends on the following factors:

  • Is the equipment mostly for business use? If yes, you can choose from any leasing option. If not, you may prefer a personal loan or a cash flow funding lease.
  • How old is the car or equipment you want to lease? Brand new equipment will cost the most, but equipment older than 5 years will cost the least. You’ll need more money to finance new equipment than you would older equipment (which requires an asset lease).
  • What financing option would you prefer? Typically a chattel mortgage is the most expensive option right off the hop, but you’ll pay less in interest. 
  • Are you purchasing through a dealership/retailer or a private seller? You can get more money in financing from a dealership/retailer, but you’ll pay more in interest. 
  • When do you plan to buy it? If you plan on buying as early as possible (7 days), you’ll get access to better financing options because they’re available immediately.
  • What are your monthly repayment and balloon payments? A 2-year monthly repayment will be more expensive immediately, but you’ll pay less interest. If you offer a balloon payment each month, you’ll pay down the principle sooner.

In the end, you’ll have access to more financing if you put more money down and have excellent credit, but the amount you’ll need will change based on the financing options you choose. If you want to lower your interest rate and borrow the least amount of money, purchase used equipment under a short repayment term.