Equipment Refinancing - Lower Your Repayments

Last updated April 2026

Quick Answer

Equipment refinancing allows Australian businesses to restructure existing equipment loans for better rates, lower repayments, or to access equity built up in financed assets. Refinancing may potentially reduce monthly repayments by 10-25% via broker comparison (as rates can vary by up to 2%) or release working capital from fully-owned equipment. The Australian equipment finance market is substantial, with over $80 billion in new annual finance and 68% of SMEs utilising it. CommBank reported a 20% year-on-year increase in financing as of December 2025, reflecting continued demand. Common reasons include securing better interest rates (particularly for improved business circumstances), managing balloon payments, consolidating multiple equipment loans, or freeing up cash flow during subdued conditions. Modern comparison platforms can assess refinancing opportunities efficiently, with settlements possible within days for straightforward applications (subject to lender and circumstances).

When to Consider Equipment Refinancing

Equipment refinancing makes sense in several circumstances beyond simply chasing lower interest rates.

• Better rates available: If your business credit profile has improved significantly since the original loan, refinancing may secure substantially lower rates. Businesses that have grown from startup to established status often qualify for considerably better terms on refinancing.
• Balloon payment approaching: Rather than finding a lump sum when your balloon payment falls due, refinancing the residual amount spreads the cost over a new loan term, easing cash flow pressure.
• Multiple equipment loans: Consolidating several equipment loans into one facility simplifies administration, may reduce total monthly repayments, and often results in better overall rates through a single larger loan.
• Cash flow pressure: Amid 2026’s subdued small business conditions, refinancing to extend loan terms reduces monthly repayment obligations, freeing up working capital for critical business needs like payroll or inventory, though be mindful of headwinds in asset finance broking.
• Accessing equipment equity: If you’ve built substantial equity in equipment (current value exceeds outstanding loan balance), refinancing can release this equity as working capital for business growth or operations.

2026 Trends: Emerging Opportunities

The 2026 market shows strong demand in specific sectors, with agricultural machinery up 116% and manufacturing up 76%. Businesses in these and other growing sectors should consider new equipment lines for ongoing purchases and fleet upgrades, which can also be refinanced or established through flexible financing.

How Equipment Refinancing Works

The refinancing process mirrors standard equipment loan applications but focuses on restructuring existing debt rather than new equipment purchases.

You obtain a payout figure from your current lender showing the total amount owing including any early exit fees. This payout figure is typically valid for 30 days and includes the outstanding principal, accrued interest, and any applicable charges.

A new lender provides funds to pay out your existing loan completely, with the equipment serving as security for the new facility. The new loan may be structured with different terms, rates, or repayment schedules better suited to your current circumstances.

Your existing lender releases their registered security interest over the equipment, which the new lender then registers in their name via the PPSR. This typically happens seamlessly as part of settlement without requiring your direct involvement.

Types of Equipment Refinancing

• Rate reduction refinancing: Securing a new loan at lower interest rates than your existing facility, reducing total interest costs over the remaining term. Most beneficial when rates have dropped significantly or your business credit profile has improved substantially.
• Balloon refinancing: Refinancing the balloon payment due at term end, spreading the lump sum over a new loan term. This common approach avoids large one-time cash outflows that might strain working capital.
• Equity release refinancing: Borrowing more than your existing loan balance to access equipment equity. For example, equipment worth $100,000 with a $40,000 loan balance might refinance for $75,000, releasing $35,000 in working capital (less fees and charges).
• Debt consolidation refinancing: Combining multiple equipment loans into a single facility, simplifying administration and potentially reducing total monthly repayments. Particularly valuable for businesses managing loans across multiple lenders with varying payment dates and terms.

See our comprehensive guide on business equipment loans for more financing options.

Costs and Considerations

Equipment refinancing involves several costs beyond new interest rates:

• Exit fees: Your existing lender may charge early termination fees, particularly for fixed-rate loans. These can be substantial—thousands of dollars for large loans—and must be factored into refinancing cost-benefit calculations.
• New establishment fees: The refinancing lender typically charges application and establishment fees similar to a new loan, usually $300-$1,000+ depending on loan size.
• Valuation costs: Older or used equipment may require independent valuations, typically costing $200-$500, to determine current market value for the refinance amount.
• Potential higher rates: If your original loan was secured at historically low rates, current market rates might be higher despite improved business circumstances. Calculate total costs carefully.
• Extended loan terms: While extending loan terms reduces monthly repayments, it increases total interest paid over the life of the loan. Balance immediate cash flow relief against long-term costs.

Eligibility for Refinancing

Refinancing applications are assessed similarly to new equipment loans:

• Demonstrated repayment history: Your performance on the existing loan significantly impacts refinancing approval. Consistent on-time payments demonstrate creditworthiness and often result in better terms.
• Current business trading: Lenders assess your current financial position, requiring recent financial statements, BAS, and bank statements showing business viability and repayment capacity.
• Equipment condition and value: The equipment must retain sufficient value to secure the new loan. Older or heavily used equipment may not support refinancing or may limit loan amounts.
• Clear title: The equipment title must be clear of any issues. Outstanding debts or disputes regarding ownership complicate or prevent refinancing.

Most traditional lenders require minimum 12 months trading history for refinancing, though specialist lenders may consider shorter per

Frequently Asked Questions

Q: Can I refinance used equipment or equipment purchased in a private sale? A: Yes, financing for used equipment, including those acquired through private sales, is viable with rates often similar to new equipment. This supports accessing equity in existing assets. For established businesses, up to $1 million in equipment finance may also be available without requiring full financials.

Q: Are equipment finance interest and depreciation tax deductible? A: Yes, for Australian businesses, interest on equipment finance and the depreciation of the financed asset typically remain tax deductible, consistent with ATO regulations.