Who is this guide for?
This guide is for small business owners, tradies, truckies and earthmoving operators who are tired of bank jargon and want clear, practical answers about asset finance.
If you run a one-truck operation, a small construction crew, a transport business or a depot and you need gear, not paperwork, this page walks you through the essentials. No banker-speak. No mystery. Just what asset finance is, what you can finance, the main loan types, how lenders actually look at deals, and what you can do to get a better result.
What is asset finance?
In a nutshell: Asset finance is a way to buy the gear your business needs using a loan or lease, rather than paying cash up front, whether it’s trucks, utes, earthmoving gear, forklifts, refrigeration units, or even depot fit-outs.
Why people use asset finance instead of cash
- Keep working capital free so you can run the business.
- Spread the cost over time to match cashflow.
- Give tax and balance-sheet flexibility (depending on structure).
- Lets you access newer, more productive kit faster so you can keep earning.
Quick example: Instead of paying $150,000 cash for a prime mover, you structure finance that spreads payments over 4 - 5 years while still maintaining funds to cover fuel and wages.
What can you finance?
Pretty much anything that earns money for your business:
- Vehicles: Trucks, prime movers, utes, vans, trailers, refrigerated trucks.
- Plant & machinery: Excavators, skid steers, rollers, diggers, forklifts.
- Static or site assets: Diesel tanks, refrigeration units, racking, workshop fit-outs.
- Commercial equipment: Refrigeration, cranes, compressors, workshop tooling.
- Sometimes: Property fit-outs or specialist conversions (depends on the lender).
Examples
- A refrigerated transport operator finances a large static diesel tank to buy fuel in bulk and supply subcontractors.
- A tradie finances a new ute and trailer, including a service body and generator, in one package.
- An earthmoving contractor finances a second-hand excavator with a chattel mortgage.
Key asset finance products explained
Chattel mortgage
Chattel mortgages make up the majority of finance loans in Australia. You borrow to buy the asset. The lender registers a security interest but you own the asset from day one.
Repayments are usually principal + interest. You can include a balloon (residual) payment at the end.
Good when you want eventual ownership and tax treatment like depreciation.
When it suits: Buying trucks or equipment where you want to own the asset at term end.
Lease (finance lease / non-ownership)
The lender owns the asset, and you make payments to use it. At the end you may have options: return, re-lease or buy at market value (depending on the lease).
Often used for equipment that depreciates quickly or that businesses want to upgrade regularly.
When it suits: Shorter-term use, or when you prefer to refresh equipment regularly.
Rental / operating lease (light touch)
Mostly used for short-term rentals or for equipment you don’t want to own. The lender/lessor handles maintenance and you pay a rental fee.
When it suits: Short projects, seasonal kit, or when you don’t want ownership or maintenance headaches.
How lenders actually think about a deal - the big 3
Lenders boil every file down to three questions: the person, the business, and the asset.
- The person
Who’s applying? Are they experienced, trustworthy and transparent? Lenders look for stability and honesty.
Credit history matters, but lenders also care about context: why a miss happened and whether it was a one-off.
- The business
Turnover, profit, cashflow patterns, BAS and the nature of the contracts or work. Lenders want to see that the business can service repayments.
Time in business and how steady income is are both important, but there are lenders and structures that help newer businesses.
- The asset
What is it, how quickly does it depreciate, and how easy is it to sell? Lenders prefer assets with clear resale value and reliable market demand.
Specialist or non-standard assets (diesel tanks, bespoke fit-outs) need better packaging. That’s where a broker with credit expertise helps.
Risk, security, serviceability
- Risk: Can the business keep paying if something goes wrong?
- Security: What collateral does the lender have (PPSR, registrations)?
- Serviceability: Are repayments affordable against realistic cashflow?
Quick tip: The better you can tell the credit story, which is the facts, context, and a plan, the more likely a lender will see the person, not just what’s on paper.
Key terms in asset finance
- Term: Length of the loan (e.g., 24, 36, 60 months).
- Balloon / Residual: A lump sum due at the end of the loan to reduce monthly payments. You can pay it, refinance it, or sell the asset to cover it.
- Fixed vs Variable Rate: Fixed stays the same for agreed period; variable moves with the market (RBA/inflation).
- Security: The asset or other collateral a lender can take if repayments stop. Often registered on the PPSR.
- Personal guarantee: A director or owner signs to personally back the loan. This is especially common for small businesses.
- LVR (Loan-to-Value Ratio): How much you borrow compared to the asset’s value. Lower LVR = less risk to lenders.
- Serviceability: The debtor’s ability to make repayments from business cashflow.
- PPSR: Personal Property Securities Register: where lenders register security interests over assets.
- GST treatment: How GST is handled in repayments or purchase price (important for cashflow and invoicing).
What affects your approval chances
Key factors lenders look at and what you can do.
- Time in business & turnover: More history and higher turnover make approvals easier, but that doesn’t mean that it’s impossible for new ABNs.
- Documentation available: BAS, bank statements, tax returns, contracts. When it comes to documents, the cleaner, the better.
- Credit history: Defaults and bankruptcies matter; context matters more than a single mark if explained well.
- Asset type & age: Newer, standard assets are easier to finance. Specialist or very old gear requires better packaging.
- Deposit: A deposit reduces LVR and helps approval, but no-deposit options exist for the right deals.
- How you present the file (credit story): Clear narratives, forecasts and supporting documents move files through quicker.
Quick action: Get your BAS and last 3 months’ business bank statements ready before you call. That alone speeds up the process.
What affects your repayments
The usual suspects that change what you pay each month.
- Interest Rate: Fixed vs variable and the rate quoted. Small shifts change monthly payments.
- Term: Longer terms reduce monthly payments but increase total interest.
- Balloon: A bigger balloon lowers monthly payments but leaves a large final payment.
- GST & Timing: How GST is handled (claimable or included) affects cashflow. Some lenders let you defer GST.
- Deposit / Trade-in: Lower loan amount = lower repayments.
- Fees: Up-front fees, documentation fees and discharge fees can add to cost.
The Asset Finance Shop process
Timeline note: Typical consumer/vehicle deals can be done in days; commercial or non-standard deals take longer. We’ll give a realistic timeline up front.
Common myths and bad advice
Some common myths and the truth you should rely on.
- Myth: “You need perfect financials.”
Truth: Lenders want clarity and honesty. Context (why a miss happened) and a plan matter. A solid credit story often beats perfect-looking but shallow paperwork.
- Myth: “New ABN = no chance.”
Truth: Some lenders will finance new ABNs with the right evidence and structure. It’s harder, but possible.
- Myth: “You should always buy with cash.”
Truth: Buying with cash removes leverage. Keeping cash in the business can be better for growth and risk management.
- Myth: “All lenders are the same.”
Truth: Lenders have different appetites and rules. A broker who knows which lenders like which deals will get you a better outcome.
FAQs
Q: Can I finance older gear?
A: Yes. Many lenders finance used equipment, but age and condition affect the terms and the lender’s appetite. Be ready with service records and photos.
Q: Can I finance a private sale?
A: Often yes. Lenders will look closely at history, condition and invoice evidence. A private sale can be fine if the asset is well-presented.
Q: What if I have bad credit?
A: Some lenders specialise in low-doc or non-standard credit. The key is to be honest, prepare a strong credit story, and use a broker who knows the market.
Q: Can new businesses (ABN < 12 months) get finance?
A: Yes, in many cases. Lenders will want other evidence of income and stability. Contracts, invoices, or director guarantees can help.
Q: Can I refinance later?
A: Absolutely. Refinancing is common to reduce repayments, move to better terms, or free equity. We review refinance opportunities regularly for clients