Machinery Finance Options: Choosing the Right Structure for Industrial Equipment

Machinery finance options in Australia include chattel mortgages, equipment loans, finance leases, and hire purchase agreements for industrial equipment. In 2025, rates typically range from 7-14% p.a. (indicative only, subject to individual circumstances), with loan amounts from $10,000 to $5 million+ and terms of 2-7 years depending on machinery type. Each structure offers different tax benefits and ownership arrangements. Chattel mortgages remain most popular for established manufacturers wanting immediate ownership and maximum tax deductions, while finance leases suit businesses preferring to upgrade equipment regularly.

For manufacturing businesses, industrial operations, and production companies, machinery represents significant capital investment. Choosing the right finance structure for industrial equipment affects not just your cash flow, but also your tax position and long-term operational flexibility.

Australian businesses have several machinery finance options, each designed for different situations. Understanding which structure fits your business can make the difference between smart financing and an expensive mistake.

The Main Machinery Finance Structures

Chattel Mortgage for Machinery

The most popular choice for established manufacturers. You own the equipment immediately, claim the full GST credit upfront (if registered), and may deduct depreciation and interest subject to your tax circumstances.

• How it works: You purchase and own the machinery from day one. The lender provides funds and holds security over the equipment until you’ve paid off the loan.
• Tax treatment: Subject to your individual circumstances, you may claim depreciation deductions, interest deductions, and upfront GST input tax credits for GST-registered businesses.
• Best for: Profitable manufacturing businesses wanting maximum tax benefits and long-term equipment ownership.
• Typical terms: 3-7 years depending on machinery type and useful life
• Indicative rates: 7-12% p.a. for established businesses (subject to individual circumstances)

Learn more about chattel mortgage structures.

Equipment Loan (Secured)

A straightforward secured loan where you own the machinery from day one, with the lender holding security.

• How it works: Borrow funds to purchase machinery, own it immediately, repay over an agreed term with the equipment as security.
• Tax treatment: Similar to a chattel mortgage—depreciation and interest deductions subject to your circumstances.
• Best for: Simple, transparent machinery purchases with standard industrial equipment.
• Typical terms: 3-7 years
• Indicative rates: 7-13% p.a. (rates vary by circumstances)

Finance Lease for Machinery

The lender owns the machinery and you lease it for a fixed term. At the end, you can return it, upgrade, or purchase at market value.

• How it works: The lender purchases the machinery and leases it to you. You make regular lease payments and have options at the term end.
• Tax treatment: Lease payments may be fully tax-deductible as operating expenses, subject to your circumstances. The lender claims depreciation.
• Best for: Businesses wanting to keep production equipment current, preferring consistent operating expenses, or with complex tax structures.
• Typical terms: 3-5 years
• Indicative rates: 8-14% p.a. (subject to assessment)

For broader equipment finance guidance, see our equipment finance Australia guide.

Hire Purchase for Machinery

Provides immediate use while you pay off the equipment, with automatic ownership transfer after the final payment.

• How it works: The lender purchases machinery, you hire it while making payments, and ownership transfers after the last payment.
• Tax treatment: You may claim depreciation and the interest portion of repayments, subject to your tax circumstances.
• Best for: Businesses wanting eventual ownership with a structured payment path.
• Typical terms: 3-7 years
• Indicative rates: 8-13% p.a. (rates depend on individual circumstances)

Common Industrial Machinery Financed

Manufacturing Equipment:

• CNC machines and lathes
• Milling and grinding equipment
• Injection moulding machines
• Assembly line equipment
• Industrial robots and automation

Material Handling:

• Forklifts and reach trucks
• Pallet jacks and stackers
• Overhead cranes
• Conveyor systems

Processing Equipment:

• Industrial ovens and kilns
• Mixing and blending machinery
• Packaging equipment
• Quality control systems

Construction & Civil:

• Excavators and earthmoving equipment
• Concrete equipment
• Road construction machinery

For construction equipment specifically, see our excavator finance guide.

Comparing Machinery Finance Options

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

Choosing the Right Option for Your Machinery

Choose a chattel mortgage if:

• You’re an established manufacturer (12+ months trading)
• You want to maximise tax deductions
• You plan long-term equipment ownership (5-10+ years)
• You’re GST-registered and want the upfront credit
• You have strong business financials

Choose a finance lease if:

• You prefer consistent, predictable expenses
• You want to upgrade machinery every 3-5 years
• You don’t need to own the equipment
• You have complex tax structures
• You want flexibility at the term end

Choose hire purchase if:

• You want eventual ownership but need flexibility
• You’re building business credit history
• You have specific accounting requirements
• Standard chattel mortgage terms don’t suit

Choose an equipment loan if:

• You want a straightforward, simple structure
• You have standard financing needs
• You prefer traditional lending arrangements
• Tax considerations are less critical

What Lenders Consider

• Machinery specifics: Type, brand, age, condition, and resale market affect approval and terms. Well-known brands from reputable manufacturers typically receive better rates.
• Business strength: Trading history (usually 12-24 months minimum), financial position, and industry type influence terms.
• Supplier credibility: Purchasing from established machinery dealers usually streamlines approval compared to private sales or unknown suppliers.
• Usage and location: How and where the machinery will be used affects lender assessment.

For broader business asset finance information, see our business asset finance guide.

Tax Considerations

Machinery finance may offer several tax benefits, subject to your individual circumstances:

• Depreciation deductions: Claim decline in value over the machinery’s effective life (chattel mortgages, equipment loans, hire purchase).
• Interest deductions: Deduct interest portions of repayments, subject to tax rules.
• Lease payment deductions: Finance lease payments may be fully deductible as operating expenses (consult your accountant).
• GST input tax credits: Claim GST upfront with chattel mortgages and equipment loans if GST-registered.
• Instant asset write-off: May be available for eligible businesses and machinery under current ATO thresholds.

Important: Tax benefits vary significantly based on your business structure, income, and how you use the machinery. Always consult your accountant before making financing decisions.

Getting the Right Structure

The best machinery finance option depends on your business age, profitability, tax position, equipment type, and ownership intentions. There’s no universal “best” choice—only the best choice for your specific circumstances.

Many manufacturers benefit from using different structures for different equipment types. You might use a chattel mortgage for essential production machinery you’ll keep for 10 years, but a finance lease for IT systems you’ll upgrade every 3 years.

Modern comparison platforms allow you to see personalized options across different structures quickly, while specialist brokers remain available for complex machinery purchases or large-scale equipment financing.

Compare Machinery Finance Structures

Ready to finance your industrial equipment?

Loan Phone provides fast comparison of machinery finance options from 100+ lenders including major banks and specialist equipment financiers.

• Fast Online Comparison — See personalised rates across different finance structures
• Manufacturing Specialists — Brokers who understand industrial equipment and production machinery
• Flexible Structures — Chattel mortgage, lease, hire purchase, or loan options
• All Machinery Types — Finance for production equipment, material handling, processing machinery
• Better Rates — Specialist lenders often provide more competitive terms than major banks

Speak with specialists:

Related Resources

Last updated: October 7, 2025