Written by Buying equipment for your business is a big investment. At Savvy, we offer a range of flexible and tailored commercial finance options to help you get the equipment you need, when you need it. We work with some of Australia’s top lenders to secure competitive finance deals that work for you. Get started with us today with a free, no-obligation quote!
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What are my finance options when buying equipment for my business?
When financing equipment for your business through Savvy, you typically have two main options:
- Chattel mortgage: with a chattel mortgage, a lender provides the funds to purchase your equipment, with the asset used as collateral for the loan. You have immediate ownership and access to the equipment and you repay the loan over a set period, usually from one to seven years. Since the asset secures the loan, it may be repossessed by the lender if your business cannot meet its repayment obligations.
- Finance lease: under a finance lease, the lender retains legal ownership of the equipment throughout the lease term – usually from one to five years –  while your business leases it for a fixed period at a fixed monthly cost. You’re responsible for all maintenance and operating costs. At the end of the term, you may have the option to purchase the asset for an additional amount, or you can return it.
If you are simply looking for finance for road vehicles like trucks, vans or cars, you may also be able to take out an operating lease through Savvy. Under this arrangement, you do not own the vehicle but essentially rent it for a set period. The lessor typically covers maintenance and operational costs during the term, and at the end of the lease, you return the vehicle.
What kind of equipment can I finance?
You can finance a broad range of equipment to support and perform business operations. This includes plant – larger, fixed machinery and equipment commonly used in industrial or trade settings – smaller equipment and business vehicles, including:
- Heavy machinery: industrial machines, heavy plant equipment, forklifts, prime movers
- Smaller equipment: portable power tools, hand tools
- Vehicles: cars, vans, utes, trucks, trailers, buses
- Construction equipment: bulldozers, cranes, frannas, excavators
- Agricultural equipment: tractors, harvesters, planters
- Restaurant equipment: furniture, ovens, fridges, freezers, dishwashers.
- Retail equipment: shop fitout, IT, POS systems
What influences the cost of equipment finance?
Asset
The equipment type, value and age all play a role in your finance deal. Newer equipment often attracts lower rates, as it depreciates more slowly and has a higher resale value, which reduces the lender’s risk. Furthermore, some items will depreciate a lot faster than others – for example, computer equipment generally needs replacing every few years while some heavy-duty manufacturing and construction equipment can last for decades.
Finances
Your business financials and even your personal borrowing profile can affect the rate and terms of your equipment finance. Stronger financials may open up lower rates or more favourable terms, while less-established businesses might face higher costs.
Interest rates
Interest rates on equipment finance are typically lower than unsecured loans, as the asset secures the financing. Rates can be either fixed, providing stable payments, or variable, which may fluctuate. The interest rate type can influence how much you pay over time.
Balloon payment
With both finance leases and chattel mortgages, you may be able to choose a balloon or residual payment at the end of the term. These payments reduce your monthly costs but leave a final, larger amount to settle. This structure helps make repayments more manageable but requires planning for the final lump sum.
Fees
As with other types of finance, equipment finance typically comes with additional fees, such as establishment fees when setting up the loan, which cover administrative costs, early termination fees if you end the lease or loan early and valuation fees if the asset needs to be valued. However, the fees that apply vary depending on the terms and lender policies.
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More of your questions about equipment finance
While it’s possible to use an unsecured business loan to buy equipment, it may not be the most cost-effective option. Since unsecured loans don’t require collateral, they generally come with higher interest rates to account for the lender’s increased risk.
In contrast, equipment finance uses the purchased asset as security, which often results in lower interest rates and more favourable terms. Using a secured loan or lease tailored to equipment purchases can help minimise costs and better align with the lifespan of the asset.
Yes – some lenders offer redraw facilities or business overdraft options as part of their machinery finance packages, allowing you to access additional funds for other equipment needs. This can be helpful for large purchases where flexibility is important. However, be aware that fees may apply for using the redraw facility, so it’s important to check the terms and conditions with your lender.
Choosing between a finance lease and a chattel mortgage depends on your business’s priorities. A finance lease may be ideal if you only need the equipment for a short-term project, as it requires less upfront capital and allows for regular payments without ownership.
However, if the equipment will serve long-term purposes and appreciate over decades, a chattel mortgage could be better, enabling you to own the asset and potentially lease it out to generate revenue.
Deciding between new and used equipment depends on factors like your budget, the type of asset, its age and condition, and depreciation rate. New equipment generally provides the latest features, better efficiency and fewer maintenance concerns, making it ideal for high-use assets or equipment that rapidly depreciates, such as computers.
However, new equipment is more expensive, so buying used may be a smarter choice for items like heavy machinery, which depreciates more slowly and retains value. Ultimately, the decision should consider how long you need the asset, its expected productivity and industry demands.
Yes – Savvy helps businesses in manufacturing, mining and heavy industry finance mobile plant for construction, aviation and rail plant, energy industrial machinery, light industrial plant, commercial enterprise business machinery, and materials handling. working with you to find a product that helps your business.
Yes – startups may be eligible for equipment loans or leases, allowing them to get the equipment they need to get off the ground and then spread the cost over a period of several years. However, as they are unestablished, many lenders can see new companies as higher risk.
Working with Savvy can help you find a lender that specialises in working with startups, making it easier to access equipment financing tailored to your business’s needs.
Yes – many of our lenders understand the needs of seasonal businesses, offering flexible repayment terms.
Yes – with many chattel mortgages or hire purchases, you may purchase equipment using 100% finance. You may also apply for amounts exceeding the value of the equipment to cover insurance, training, and other costs.
Yes – businesses with impaired credit can apply for equipment finance. Many lenders offer options tailored to help businesses with bad credit, though terms might vary. If you want to explore your options, Savvy’s friendly consultants can search and compare available finance deals based on your circumstances.
Yes – we can help you find loans and leases that extend beyond the usual five-year terms, or are much shorter. Ask your consultant for more information.
Yes – equipment finance may offer tax advantages. On a chattel mortgage, interest may be tax-deductible as a business expense. If your business is registered for GST, you may also be able to claim a GST credit on the initial purchase on your Business Activity Statement (BAS).
With a finance lease, GST paid on lease payments can also be claimed as an input credit, reducing your GST liabilities. Additional tax deductions may apply depending on your situation, so consulting with a tax advisor can help you maximise potential savings.
No – if you opt for a finance lease, chattel mortgage or a standard business loan, the equipment will remain yours, so returning it is typically not an option.
