Equipment Finance: How It Works, Rates & Who It Suits

Key highlights

• Acquire equipment now and spread the cost over its useful life
• Preserves your working capital and keeps existing credit lines free
• The equipment itself often serves as the security
• Structures include chattel mortgage, lease and rental options
• Repayments can be matched to the revenue the asset generates

What equipment finance is

Equipment finance is funding used to acquire business equipment, from commercial kitchen fit-outs and manufacturing machinery to medical devices, IT systems and workshop tools. Rather than paying the full price upfront and draining your cash, you spread the cost over a term that reflects the equipment's working life, repaying as the asset earns its keep. In many structures the equipment itself acts as the security for the loan, which can mean sharper pricing than unsecured borrowing. It lets a business stay current with the gear it needs to operate and compete, without tying up the capital that keeps day-to-day operations running. The funding is tailored to the asset, the term and the way you intend to use it.

How the funding is structured

Equipment finance comes in several forms. A chattel mortgage or equipment loan lets you own the asset from day one while the lender holds security over it until the loan is repaid, and there may be tax and GST considerations to discuss with your accountant. A lease or rental sees the lender own the equipment while you pay to use it, sometimes with the option to buy at the end. Terms are commonly set to match the equipment's expected life, and some structures include a balloon or residual payment at the end to lower regular repayments. The right structure depends on whether ownership, lower repayments or flexibility matters most to your business.

Who equipment finance suits

This funding suits any business that relies on physical equipment to generate revenue, including manufacturers, hospitality venues, medical and dental practices, gyms, salons, farms and trades. If a piece of equipment will pay for itself over time by boosting capacity or efficiency, financing it rather than buying outright lets you start earning from it immediately while preserving cash. It is also valuable when you need to replace ageing gear, scale up for growth, or add capability to win new work. Because repayments can often be aligned to the income the asset produces, it suits businesses that want the equipment to effectively fund itself out of the revenue it creates.

The benefits worth knowing

The main advantage is preserving working capital: you get the equipment without a large upfront outlay, keeping cash and other credit lines free for operations and opportunities. Fixed repayments make budgeting simple, and because the asset usually provides the security, rates can be more competitive than unsecured funding. There can be tax efficiencies too, such as deductions for interest and depreciation or GST treatment depending on the structure, though these depend on your circumstances and should be confirmed with your accountant. Matching the term to the asset's life means you are not still paying for equipment long after it has stopped being useful, which keeps the arrangement sensible and cost-effective over time.

Eligibility, amounts and rates

Lenders typically look for an active ABN and a period of trading, with the equipment being financed forming part of the security. Low-doc options using bank statements and BAS can suit newer businesses or those without full financials, and the strength of the asset can support the application. Funding is available from around $5,000 up to $5 million, indicative and subject to the asset and your profile. Rates start from around 7.49% p.a. for stronger secured facilities, with lower-doc, older equipment or weaker credit priced higher depending on term, security and profile. Terms generally run from a few months up to five years. Enquiring is a soft credit check that will not affect your credit score.

Why compare lenders

Equipment lenders differ in the asset types they favour, how they treat used or specialised gear, the structures they offer and how they price residuals and fees. A lender comfortable with your industry and equipment can offer terms a generalist will not match. By comparing a panel of 80+ banks and non-bank lenders through Overdrive on one application, you can weigh structure, rate and flexibility side by side and match with a funder that understands the equipment you are buying. We manage the paperwork, coordinate with the supplier where needed, and line up genuine offers so you secure the right gear on terms that suit both the asset and your cash flow.

New versus used equipment

Whether you are buying new or used equipment affects how the finance is structured and priced. New equipment is generally straightforward to fund, with clear valuations and the longest useful life, which supports longer terms and often keener rates. Used equipment can absolutely be financed too, and doing so can be a smart way to acquire capable gear at a lower price, but lenders look more carefully at age, condition and expected remaining life, and may set shorter terms or slightly higher pricing to reflect the greater uncertainty. Specialised or older machinery can be more selective, since not every lender understands its resale value. Knowing this up front helps you plan, and it is exactly where comparing lenders pays off, because appetite for used and specialised equipment varies widely across the market.

If your business needs new or replacement equipment, financing it can get you working sooner while keeping cash in the business where it is most useful. Contact Overdrive for an obligation-free quote and we will compare a panel of 80+ banks and non-bank lenders to find the right structure and rate for the asset you are buying, whether it is new or used. There is no obligation, and enquiring is only a soft credit check, so your credit score is unaffected. We manage the paperwork, coordinate with your supplier where needed, and eligible applicants may see fast approval and settlement within a day or two.