Equipment Finance Options: Choosing the Right Structure for Your Business

Equipment finance options in Australia typically include chattel mortgages, finance leases, hire purchase agreements, and equipment loans. In 2025, rates generally range from 7-15% p.a. (indicative only), with loan amounts from $5,000 to $5 million and terms of 1-7 years, subject to individual circumstances. The right structure depends on your business age, tax position, and whether you want immediate ownership. Each option offers different tax benefits and cash flow impacts, with settlements possible within days for straightforward applications.

When you’re ready to finance business equipment, the structure you choose matters just as much as the interest rate. The wrong setup can cost you thousands in unnecessary tax or tie up cash flow you could use elsewhere. The right one? It can turn a $100,000 purchase into a tax-effective investment that pays for itself.

Australian businesses have several equipment finance structures to choose from, each designed for different situations. Understanding which one fits your business can make the difference between smart financing and an expensive mistake.

The Main Equipment Finance Structures

Chattel Mortgage

A chattel mortgage gives you immediate ownership of the equipment while the lender holds security until you’ve paid it off. This is the most popular option for established businesses with a solid trading history.

• How it works: You own the asset from day one, claim the full GST input tax credit upfront (if registered), and make regular repayments including interest. At the end of the term, the equipment is yours outright with no balloon payment required (though you can structure one if preferred).
• Tax treatment: You may claim depreciation and interest as tax deductions, subject to your individual circumstances. The upfront GST credit can provide immediate cash flow benefits for GST-registered businesses.
• Best for: Profitable businesses wanting to maximise tax deductions and own equipment long-term. Particularly effective for vehicles, machinery, and equipment you’ll use for years.
• Indicative rates: Typically 7-12% p.a., depending on business strength and asset type (rates vary by individual circumstances).

Learn more about chattel mortgage structures and benefits.

Finance Lease

With a finance lease, the lender owns the equipment and you lease it for a fixed term. At the end, you typically have options to return it, upgrade, or purchase it at market value.

• How it works: The lender purchases the equipment and leases it to you. You make regular lease payments (which may be fully tax-deductible, subject to your circumstances), and the lender claims the depreciation.
• Tax treatment: Lease payments are generally fully deductible as operating expenses (consult your accountant). You don’t claim depreciation, as you don’t own the asset during the lease term.
• Best for: Businesses that want to keep equipment current, prefer consistent expenses, or have complex tax structures. Common in industries where technology changes rapidly.
• Indicative rates: Usually 8-14% p.a. (rates subject to assessment and individual circumstances).

Hire Purchase

A hire purchase agreement is a middle ground where you hire the equipment with an option to purchase at the end. You don’t own it until the final payment, but it’s designed for eventual ownership.

• How it works: Similar to a lease, but with a clear path to ownership. You make regular payments, and once the final payment is made, ownership transfers to you automatically.
• Tax treatment: You can generally claim depreciation and the interest portion of repayments, though the structure differs slightly from a chattel mortgage (seek professional advice).
• Best for: Businesses that want ownership but need lower initial payments or have specific accounting requirements.

Equipment Loan (Secured)

A traditional equipment loan where you borrow money to purchase equipment outright, using the equipment as security.

• How it works: You own the equipment from day one, the lender registers security over it, and you repay the loan over an agreed term.
• Tax treatment: Similar to a chattel mortgage—you claim depreciation and interest deductions subject to your tax circumstances.
• Best for: Simple, straightforward transactions where you want full ownership and control from the start.

For comprehensive guidance on equipment loans, see our equipment loans guide.

Comparing Equipment Finance Options

This comparison provides general information only. Tax treatment depends on individual business circumstances.

Which Option Suits Your Business?

Choose a chattel mortgage if:

• You’re an established business with strong financials
• You want to maximise tax deductions
• You plan to keep the equipment long-term
• You’re GST-registered and want the upfront credit

Choose a finance lease if:

• You prefer consistent, predictable expenses
• You want to upgrade equipment regularly
• You have complex tax structures
• You don’t need to own the asset

Choose hire purchase if:

• You want eventual ownership but need flexibility
• You’re building business credit history
• You have specific accounting requirements

Choose an equipment loan if:

• You want a simple, straightforward structure
• You have standard financing needs
• You prefer traditional lending arrangements

Getting the Right Structure for Your Situation

The best equipment finance option depends on your business age, profitability, tax position, and how long you’ll use the equipment. There’s no universal “best” choice—only the best choice for your specific circumstances.

Many businesses benefit from using different structures for different assets. You might use a chattel mortgage for a delivery truck you’ll keep for 10 years, but a finance lease for IT equipment you’ll upgrade every 3 years.

Modern comparison platforms allow you to see personalised options across different structures quickly, with specialist brokers available for more complex scenarios.

Compare Equipment Finance Structures

Ready to find the right equipment finance option?

Loan Phone provides fast online comparison across multiple structures and lenders, with specialist support when you need it.

Speak with specialists:

For business owners comparing asset finance approaches, see our asset finance Australia guide.

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Last updated: October 7, 2025