Equipment Finance Options

EquipPay facilitates the four most common commercial equipment finance structures in Australia:

• Chattel Mortgage — the most common product; you own the equipment, lender takes security over it
• Finance Lease — lender owns the equipment, you lease it with the option to purchase at end of term
• Operating Lease — similar to a rental; lender owns the equipment, you use it for the term and return it
• Hire Purchase — you hire the equipment and progressively take ownership as repayments are made

The right product depends on your business structure, accounting preferences, cash flow, and whether you want to own the equipment at the end of the term. EquipPay strongly recommends consulting your accountant or tax adviser before selecting a product type.

Here is a high-level comparison — consult your accountant for specific tax advice:

This table is a general guide only and not tax advice. Your accountant can confirm which structure is optimal for your specific circumstances.

A chattel mortgage is the most common commercial equipment finance product in Australia. Here is how it works:

• Immediate ownership: Your business takes ownership of the equipment at the time of purchase — the equipment is yours from day one.
• Lender security: The lender takes a mortgage (a registered security interest under the PPSR) over the equipment as collateral for the loan.
• Fixed repayments: You make regular fixed repayments (weekly, fortnightly, or monthly) over an agreed term — typically 2–5 years.
• Mortgage discharge: Once the loan is fully repaid, the lender's security interest is discharged and you hold clear title to the equipment.

Key tax and accounting notes (general — consult your accountant):

• GST on the full purchase price may be claimable in your next BAS
• Interest on repayments may be tax deductible
• Depreciation may be claimable as a business expense
• The asset appears on your balance sheet

Yes. A balloon payment (also called a residual value) is a lump-sum payment scheduled for the end of the loan term, which reduces the size of your regular repayments throughout the loan.

Balloon payments suit businesses that:

• Want lower periodic repayments to manage cash flow
• Expect to refinance at the end of the term
• Plan to sell or trade the equipment at end of term and use sale proceeds to cover the balloon

The trade-off is that you pay more total interest when a balloon is included. Your accountant can advise on the optimal balloon percentage for your situation.

A chattel mortgage is a commercial finance product designed for business use. A personal loan is a consumer credit product not suited for business equipment purchases. The key differences:

• Tax treatment: Chattel mortgage interest and depreciation may be tax deductible. Personal loan interest is generally not deductible.
• GST: GST on the equipment purchase may be claimable on a chattel mortgage. Not applicable with a personal loan.
• Interest rates: Commercial rates through a chattel mortgage are typically lower than consumer personal loan rates.
• Security: Chattel mortgage is secured against the equipment. Personal loans are often unsecured.

For any business equipment purchase, a chattel mortgage through EquipPay is almost always the more appropriate and cost-effective structure.

The key structural differences between a finance lease and a chattel mortgage:

• Ownership during term: In a chattel mortgage, the business owns the equipment from day one. In a finance lease, the lender technically owns the equipment throughout the lease term.
• End of term options: Finance leases typically offer three end-of-term options — purchase the equipment, extend the lease, or return the equipment. A chattel mortgage has no end-of-term option; ownership transfers immediately.
• GST treatment: Chattel mortgage allows full GST claim on the purchase. Finance lease GST is claimed progressively on each payment.
• Deductible item: Chattel mortgage: interest and depreciation. Finance lease: typically the full lease payment may be deductible as a business expense.

This is a general overview only. Consult your accountant or tax adviser before choosing between these products.

A finance lease is a financing arrangement where the lender (lessor) purchases the equipment and leases it to you (the lessee) for an agreed term. Key features:

• You make regular lease payments for the duration of the agreed term
• The equipment is technically owned by the lender throughout the lease
• At the end of the term, you have three options: (1) purchase the equipment by paying the agreed residual amount, (2) extend the lease for a further term, or (3) return the equipment
• For accounting purposes, finance leases are treated as on-balance-sheet under AASB 16 for most businesses

Finance leases are often preferred by businesses that want flexibility at end of term — particularly where equipment technology evolves quickly.

An operating lease is a lease where the lessor retains the risks and rewards of ownership, and the lessee simply pays to use the equipment for the agreed term. Key features:

• You do not own the equipment and do not take ownership at end of term
• Lease payments are for the right to use the equipment only
• The lender/lessor takes on the residual value risk
• Typically the full lease payment is tax deductible as a business operating expense

Operating leases suit businesses that prefer not to own equipment long-term, want to avoid residual value risk, need to upgrade frequently, or where full deductibility of the lease payment is preferred.

At the end of a finance lease, you typically have three options:

• Option 1 — Purchase: Pay the agreed residual (balloon) amount and take full ownership of the equipment.
• Option 2 — Refinance the residual: Rather than paying the residual as a lump sum, you can finance it — effectively starting a new shorter-term loan for that remaining amount.
• Option 3 — Return the equipment: Hand the equipment back to the lessor. If the equipment's actual market value at that point is less than the residual, you may be liable for the shortfall under some agreements.

Your EquipPay contact will reach out before the end of your lease term to discuss your options and help you prepare.

EquipPay finances a wide range of commercial and business equipment across virtually all industries. Common categories include:

• Construction & earthmoving: excavators, loaders, compactors, scaffolding, concrete equipment
• Hospitality & catering: commercial kitchen fit-outs, ovens, refrigeration, coffee machines, POS systems
• Medical & healthcare: diagnostic equipment, dental chairs, imaging devices, patient monitoring
• Beauty & wellness: salon chairs, laser equipment, tanning beds, spa systems
• Fitness & gym: cardio machines, strength equipment, functional training rigs
• Agriculture: tractors, harvesters, irrigation, livestock equipment
• Manufacturing: CNC machines, lathes, presses, packaging lines
• Transport & logistics: trucks, trailers, forklifts, material handling
• Technology & IT: servers, networking, point-of-sale, AV systems
• Solar & energy: commercial solar systems, battery storage, generators

Both new and used equipment can typically be financed, subject to the equipment meeting lender age and condition criteria.

Yes. EquipPay can facilitate finance for used and second-hand equipment, subject to lender criteria around age and condition. General guidelines:

• Most lenders will consider used equipment up to 10–15 years old depending on type
• The equipment must be in good working condition and capable of serving as adequate security for the loan
• An independent valuation may be required for high-value used equipment
• Finance terms for used equipment may be shorter than for new equipment
• Lenders may require evidence of purchase price — typically a formal invoice or sale agreement from the seller

Buying from a private seller or auction is also possible in many cases. Contact EquipPay to discuss your specific equipment before applying.

Loan terms available through EquipPay typically range from 12 months to 84 months (7 years), with the most common terms being 24, 36, 48, and 60 months.

Choosing the right term involves a trade-off:

• Shorter term (e.g., 24 months): higher periodic repayments, lower total interest paid, loan cleared faster
• Longer term (e.g., 60 months): lower periodic repayments, more total interest paid over the life of the loan

Practical considerations:

• The loan term should ideally not exceed the useful life of the equipment
• A longer term reduces pressure on cash flow
• EquipPay's repayment calculator lets you model different term and balloon combinations before applying

EquipPay facilitates equipment finance across a wide range of amounts:

• Minimum: Typically $5,000 (some lenders may have a higher minimum for specific products)
• Maximum: $2,000,000+ for qualifying businesses (larger amounts may require additional documentation and assessment time)

The practical maximum for a given application depends on your business's financial profile — specifically annual revenue, existing debt obligations, and the nature of the equipment being purchased.

For very large equipment packages or fleet purchases, contact EquipPay directly to discuss structuring.