Asset Finance in Simple Terms
Asset finance is a way for businesses to get the equipment, vehicles, or machinery they need without paying the full purchase price upfront. Instead, a financier (bank, lender, or leasing company) provides the funds, and you repay over an agreed term — typically 1 to 7 years.
The asset itself acts as security for the finance. If you stop making payments, the financier can repossess it. This means you usually don't need to put up your home or other property as collateral.
In Australia, asset finance is used to acquire:
- Trucks & prime movers — the largest segment of asset finance
- Utes & commercial vehicles — tradies, salespeople, delivery fleets
- Earthmoving equipment — excavators, loaders, graders
- Agricultural machinery — tractors, harvesters, irrigation systems
- Medical & dental equipment — imaging, chairs, surgical tools
- IT & technology — servers, POS systems, software licences
- Manufacturing equipment — CNC machines, lathes, presses
- Office fitouts & furniture — desks, partitions, signage
How Asset Finance Works
The process is straightforward:
- Choose your asset — find the truck, equipment, or vehicle you want to buy (new or used).
- Choose a finance structure — chattel mortgage, finance lease, operating lease, or novated lease (explained below).
- Apply — provide your ABN, ID, and basic business details. For amounts under $250,000, many lenders offer "low-doc" approvals with minimal paperwork.
- Get approved — fast-track approvals can happen in hours. Larger or complex deals take 2–5 business days.
- Settlement — the financier pays the dealer or seller directly. You take delivery of the asset.
- Repay — make weekly, fortnightly, or monthly payments over the agreed term.
- End of term — depending on your structure, you own the asset outright, pay a residual/balloon, or return it.
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Get a Free Quote →The Four Main Structures
Australian asset finance comes in four flavours. Each has different ownership, tax, and cash flow implications:
1. Chattel Mortgage (Commercial Goods Loan)
The most popular structure. The lender provides a loan secured against the asset, and you own the asset from day one. You claim the full GST credit upfront, depreciate the asset, and deduct interest. Most banks now call this a "commercial goods loan" — it's exactly the same product.
Best for: GST-registered businesses keeping assets long-term (trucks, earthmoving, farm machinery).
2. Finance Lease
The financier owns the asset during the term. You make regular lease payments (100% tax-deductible) and pay a mandatory residual at the end to take ownership. Simpler tax treatment — one deductible figure per period.
Best for: Businesses wanting simple tax and lower monthly payments.
3. Operating Lease
A true rental. You use the asset for a fixed term and return it at the end — no residual, no balloon, no disposal hassle. Running costs (insurance, servicing, tyres) can be bundled into one payment.
Best for: Fleet vehicles, technology, medical equipment — anything you'll upgrade regularly.
4. Novated Lease
A three-way agreement between employee, employer, and financier. Lease payments and running costs are deducted from your pre-tax salary, reducing your taxable income. Only available to PAYG employees for vehicles.
Best for: Employees wanting a tax-effective car.
Can't decide? Compare all four structures side by side →
Current Asset Finance Rates (2026)
Rates vary by lender, asset type, loan amount, and your credit profile. As a general guide:
| Structure | Indicative Rate Range* | Typical Term |
|---|---|---|
| Chattel Mortgage / CGL | 5.99% – 12% p.a. | 1–7 years |
| Finance Lease | 6.25% – 12% p.a. | 1–7 years |
| Operating Lease | 6.49% – 14% p.a. | 1–5 years |
| Novated Lease | 6.25% – 11% p.a. | 1–5 years |
*Rates are indicative only, subject to lender approval, and may change without notice. View detailed rates →
Factors that influence your rate:
- Credit score & history — better credit = better rate
- Asset age — new assets attract lower rates than used
- Loan amount — larger amounts may get better pricing
- Business trading history — 2+ years is ideal
- Deposit — putting money down can improve your rate
Tax Deductions & the Instant Asset Write-Off
Asset finance is inherently tax-efficient. Every structure offers deductions, but in different ways:
| Deduction Type | Chattel Mortgage | Finance / Operating Lease | Novated Lease |
|---|---|---|---|
| Interest | ✓ Deductible | Included in payment | Pre-tax salary |
| Depreciation | ✓ Claimable | ✗ Financier claims | ✗ |
| Lease Payments | N/A | ✓ 100% deductible | Pre-tax salary |
| GST Credit | 100% upfront | On each payment | Managed by provider |
| Instant Asset Write-Off | ✓ Eligible | ✗ | ✗ |
Instant Asset Write-Off 2025–26
Small businesses (aggregated turnover under $10 million) can immediately deduct the business portion of assets costing less than the threshold in the year they're first used or installed. This only applies to chattel mortgage / commercial goods loan because you must own the asset to claim it.
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Open Calculator →Who Can Apply?
Asset finance is available to most Australian businesses and some employees:
- ABN holders: Sole traders, partnerships, companies, and trusts with an active ABN can apply for chattel mortgage, finance lease, or operating lease.
- Startups: Some lenders approve startups with less than 12 months' trading history. Startup finance guide →
- Employees: PAYG employees can access novated leases through their employer (no ABN needed).
- Bad credit: Specialist lenders work with applicants who have defaults, judgments, or low credit scores. Rates are higher. Bad credit finance guide →
Typical Requirements
- Active ABN (for business structures)
- Australian citizen or permanent resident
- Photo ID (driver's licence or passport)
- Financial statements or tax returns (for amounts over $250,000)
- Asset quote or invoice from the dealer/seller
Financing New vs Used Assets
You can finance both new and used assets. Key differences:
| Factor | New Asset | Used Asset |
|---|---|---|
| Rates | Lower (less risk) | Higher (typically +0.5–1.5%) |
| Maximum Term | Up to 7 years | Usually capped at asset age + term = 12–15 years |
| Deposit | Often 0% | May require 10–20% |
| Lender Availability | All lenders | Some lenders limit age |
| Depreciation | Higher (new cost base) | Lower (reduced cost base) |
Costs & Fees to Watch
- Establishment fee: $0–$990 (some lenders waive it)
- Monthly account fee: $0–$15/month
- Early termination fee: Varies — can be significant in the first 1–2 years
- PPSR registration: ~$7.40 per registration
- Brokerage fee: Paid by the lender, not by you (when using a broker like us)
Always ask for a full fee schedule before signing. A good broker will ensure there are no hidden costs.