Equipment finance – what are your options

Jan Watman, Director of Start Fresh Finance, navigates the minefield of finance types and technical terms to give you an insight into your options when applying for equipment finance. 

What to consider when applying for equipment finance

Financing the commercial equipment you require for your business can assist with easing cash flow issues, increased tax benefits plus much more.

When applying for equipment finance, it is important to have a broad understanding of what type of finance you require and what will be required from you by financiers as they process your application. Depending on the amount of finance you require (and the financier), the amount of supporting information required may vary.

The key points to consider before applying for finance are:

– What type of finance will suit your needs? 

With numerous types of finance in the market, it is best to do some research before applying so you know what is available. With numerous long & short term options available, there will be an equipment finance type that will suit you. And don’t forget to look into the benefits of each! Pose as many questions as you like to your financier or broker before deciding.

– Do you need to provide security? 

Depending on the financier & funding amount, different levels of security may be required. Some financiers ask for a deposit + collateral, whereas others use the equipment you finance as security. Be sure to find this out before choosing an equipment finance type.

– What can you afford? 

Don’t over-stretch yourself when it comes to your repayments. That ‘you-beaut, all things included’ piece of equipment may be your dream, but can your business afford the repayments? Can a smaller piece of equipment or perhaps a second hand piece of equipment do the job?

– Have your business information ready to go! 

Before sending through your application, be sure to have all your supporting information ready to go. If you have to send through supporting information as it is requested by the financier, it will make the process drawn out and inefficient. By supplying all the information upfront (even though some of it may not be required) it shows the financier you’ve done your research, understand your business and are ready to improve your business.

– Read the fine print. 

An obvious one, but be sure to read the terms and conditions before signing anything. Best recommendation is to do your research before signing on the dotted line of an equipment finance contract. Ask plenty of questions and consider using a finance broker if it all gets too much! Australian broker associations such as CAFBA and FBAA have websites with a wealth of information on using a broker and how to find one if you want to know more.


What your equipment finance options are

The equipment finance industry can be a minefield for technical finance terms that can confuse everyone who isn’t in the finance industry. As a consumer, there are plenty of finance options that you can take advantage of. Each option has its pros and cons, so I’ve explained them below to give you an insight into your options.

Rental – An equipment rental agreement that generally runs for a set period of time such as 12 months. The fixed repayments are often fully tax deductible and in some cases, rebates are given to customers when purchasing equipment outright. Along with the ownership option, equipment rentals may be returned to the financier after the initial term, and in some cases, with no penalties but always check these details, as rental options from one provider to another may differ. These options are perfect for those customers unsure whether they will need the equipment long term or want flexibility to adapt to what changes may occur to their business.

Hire – Equipment hire is when you hire the piece of equipment for the period of time you need it. A bond is sometimes required before getting the equipment, and some pieces of equipment can be hired with someone to operate the equipment for you. This option can get expensive if you are using it regularly.

Hire Purchase – A hire purchase is similar to a hire, except you own the equipment at the end of your agreement. The financier owns the equipment, with repayments tailored to suit your business needs. You can choose to purchase the equipment outright at any time, but can only claim the interest component of repayments and the depreciation on assets.

Operating Lease – An operating lease is similar to equipment rental although the contracts are generally between 2-5 years. Repayments are fixed, meaning you can organise your other expenses with the knowledge that these payments will stay constant. This option can be beneficial to those customers knowing they’ll need a piece of equipment for up to 5 years.

Equipment Loan (Chattel Mortgage) – An equipment loan (or Chattel Mortgage as it is sometimes known as) is where a customer borrows funds to purchase a piece of equipment. The financier registers its interest on the equipment with the PPSR and takes a ‘mortgage’ over the equipment as security. Contracts can range from 1-5 years in length, with the interest payments able to be claimed on tax.

This is a good insight for anyone looking to finance their next equipment purchase. With plenty of options out there, be sure to analyse each individually to decide what would work best for your business.

Should you have any questions or wish to discuss your financing requirements, please contact Jan Watman from Start Fresh Finance on 0468 371 449 or email .  Website:




Start Fresh Finance is an independent business and in making this referral, we do not advise on the products and services Start Fresh Finance may provide to you, nor do we represent that Start Fresh Finance products and services are right for you. You need to make your own decision based on the information Start Fresh Finance provides. 

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Insurance Advisernet Financial Services Pty Ltd strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Insurance Advisernet Financial Services Pty Ltd and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306.