How equipment finance
actually works.

A chattel mortgage is a loan secured against the equipment. You own the asset from day one, the lender holds the mortgage, and interest + depreciation are typically tax-deductible for ABN holders. It is the most common structure for equipment finance in Australia.

A lease means the lender owns the equipment and you lease it from them. Lease payments are typically a fully deductible operating expense. Leases suit businesses that prefer to upgrade regularly rather than hold assets long-term.

Hire purchase is similar to chattel mortgage, but GST is spread across the repayments rather than claimed upfront. Ownership transfers at the end of the term. It is less common now but can suit specific tax positions.

A balloon is a deferred lump sum due at the end of the loan term. Adding a balloon reduces monthly repayments but leaves a larger final amount. Balloons are common on equipment finance and can often be refinanced or paid from asset sale proceeds.

Typical terms run 3 to 7 years. New or near-new assets can often stretch longer; older used assets are capped shorter. The term should match the expected earning life of the asset, not just minimise the monthly cost.

For ABN holders, the interest component of your repayments and the depreciation on the asset are generally tax-deductible when the equipment is used to produce income. How the deductions work depends on the structure — chattel mortgage, lease or hire purchase. This is general information only; your accountant should confirm what applies to your business.

Eligible small businesses can immediately deduct the cost of qualifying assets rather than depreciating them over several years — even when the asset is financed — because under a chattel mortgage you own the asset from day one. The asset must be installed and ready for use by the relevant date, so timing matters near 30 June. Thresholds and eligibility change, so confirm the current rules with your accountant before relying on them.

Many equipment finance deals can be arranged with no deposit, particularly for established businesses or property-backed applicants. Contributing a deposit usually lowers your repayments and can improve the rate offered. The right approach depends on the asset, your trading history and cashflow — which is exactly what TMF structures across the lender panel.

GST-registered businesses can generally claim the GST credit on the purchase price. Under a chattel mortgage the credit is usually claimable upfront in your next BAS, whereas hire purchase spreads it across the term. Your accountant should confirm the treatment for your situation.

Rates depend on the asset, its age, the loan term, your deposit and your business profile — new assets and shorter terms generally price better than older or private-sale equipment. As a broker across 40+ lenders, TMF works to find the most competitive structure for your scenario rather than a single fixed offer.