Equipment and asset finance
The affordable, flexible way to buy business assets, equipment and other high value items
Your guide to asset finance in Australia
Looking for a business equipment loan? Would you like to grow your business without spending your savings? Want to understand your asset finance options?
Welcome to our asset finance hub. On this page, you'll find a host of information about the power of asset finance to help unlock the growth potential of your business. My Finance Agent has provided award-winning, tailored lending advice to Australian businesses since 2014. We promise to become a trusted professional you can rely on for expert business lending advice and find the best rate and loan products to suit your needs.
Keep reading to discover...
Everything you need to know about asset finance:
The different types of asset finance and how they work
The many potential business benefits of asset finance
How we can guide you through the process of choosing asset finance
Answers to common questions about asset finance
What is asset finance?
Asset finance is an overarching term that describes a number of different approaches to buying 'big ticket items' using credit.
An asset can be machinery, tools, vehicles, office furniture, inventory, buildings, land—any tangible, physical resource that your business needs.
The asset in question usually acts as collateral to secure the finance against. Treating the asset as security reduces risk for the lender. In the unlikely event you were to stop making your repayments, the finance company may repossess and sell the asset to recoup any losses.
A business may also use an existing asset (or group of assets) to secure a line of credit. A line of credit can be used flexibly for any purpose.
Different types of asset finance
There are a variety of asset finance options, each designed to suit different business needs.
This arrangement involves the business hiring an asset from the finance company for an agreed period. Upon completion of payments, the business has the option to purchase the asset for a nominal fee.
A finance lease allows the business to use an asset for an agreed-upon period, while the finance company retains ownership. The business pays fixed lease rentals and may have the option to purchase the asset at the end of the term.
Similar to a finance lease, an operating lease provides the business with use of an asset for a specific period. Additionally, at the end of the lease term, the business usually has the option to return the asset, renew the lease, or buy the asset at market value.
With a chattel mortgage, the business takes ownership of the asset immediately, while the lender holds a mortgage over it as security. The business repays the loan in instalments and, once the final payment is made, the mortgage is removed.
Primarily used for vehicles, a novated lease involves an agreement between an employee, employer, and the finance company. The employee leases a vehicle and the employer takes on responsibility for lease payments, which are deducted from the employee's pre-tax income.
Using asset finance to buy business equipment may offer financial flexibility, preserve savings and working capital, and provide potential tax benefits.
Preservation of capital
Rather than tying up a significant cash in equipment purchases, with asset finance you may be able to borrow up to 100% of the asset value. This may preserve your working capital for other business investments, such as expansion, marketing, and inventory.
Improved cash flow
With asset finance, you spread the cost of the purchase over time, making regular payments rather than a large one-time payment. This can smooth cash flow and make budgeting more predictable.
No personal risk
It's not uncommon for owners to take on personal risk for big business purchases, whether via personal credit cards, using their home or property as collateral, or digging into their savings. But with asset finance, the asset itself is used as security, which means there is no need for the business owner to risk any personal assets.
Why asset finance? What are the benefits?
Being tax deductible, asset finance may reduce your business' taxable income and, therefore, lower your tax exposure. Lease payments, for example, are generally a deductible business expense.
Access to better equipment
By spreading the cost, you may be able to afford better equipment than if you were restricted to the funds available in your savings.
When you buy equipment outright, the business bears the cost of depreciation (the decrease in an asset's value over time). With asset finance, particularly leasing, the finance company absorbs depreciation risks.
Flexibility and upgradability
Asset finance may allow for flexible terms, including the option to upgrade equipment at (and sometimes before) the end of the term. This may help you to keep up with technological upgrades without worrying about the depreciation of equipment value.
Lower maintenance costs
With asset finance, you may be able to elect for the finance company to assume responsibility for the upkeep and repairs of the asset. This can be a useful strategy for shielding the business from unforeseen maintenance costs.
Hedge against inflation
Financing may allow you to pay for the equipment in fixed instalments, which can act as a hedge against inflation over time. As inflation rises, the value of your fixed payments would decrease in real terms.
Businesses will often drain their savings to buy tools or equipment, whereas finance would expose the business to less risk. We can help you balance the pros and cons.
Director and finance broker
How to apply for asset finance
We design tailored business finance solutions, which includes finding our clients the most competitive rates and terms.
This is how the asset finance process works:
1. Determine your needs
We'll meet with you to talk about your business needs and the specific asset or equipment you'd like to purchase.
2. Select a finance option
We'll recommend the right type of asset finance to best suits your needs, whether that's a chattel mortgage, finance lease, hire purchase, or another option. We'll outline all of the pros and cons.
3. Research lenders
We'll match your finance needs across our national panel of asset finance lenders. We'll compare terms, interest rates, repayment options and more, and come back to you with a detailed analysis and recommendation.
4. Submit your application
After selecting a lender, we'll manage your application. This includes details about your business, the asset you intend to finance, financial statements, and other supporting documents. Our process is easy and streamlined for your convenience.
5. Finance Assessment
The lender will assess your application. When approved, they'll provide an agreement outlining the terms, conditions, and repayment schedule. We'll ensure that all of the details are correct before you sign and accept the contract.
6. Asset inspection and valuation
Depending on the lender and type of asset, an inspection or valuation may be required. We'll help to coordinate this process.
7. Settlement and delivery
Once all of the documentation is signed and submitted, the contract will quickly progress to settlement and the funds will be released. Depending on the type of finance, this may involve the lender paying for the asset on your behalf and arranging for you to take delivery.
8. Ongoing reviews
Whereas many finance brokers would wave goodbye at this point, we remain in contact to check that the loan has been set up properly and that the lender is delivering what you agreed to. Our promise is to be your trusted business finance expert.
Whether you prefer a shorter asset finance term with higher payments or a longer term with lower payments, we will tailor a solution to fit your goals and budget.
Frequently asked questions about asset finance
Can I get asset finance by going directly to the bank?
Asset finance is available from a wide range of banks, as well as niche lenders. The potential disadvantage of going directly to your bank is that they can only show you their own rates and products. The benefit of using an asset finance broker is that we can compare your needs across our panel of 30+ lenders. More lenders means more options and, generally speaking, a more competitive outcome for you.
What costs are involved with asset finance?
The costs associated with asset finance will vary depending on the type of asset, lender and finance terms. When we compare lenders, we include all of these factors in our calculations. There may be:
Upfront costs (e.g., application and valuation fees).
Interest charges: Your repayments will be calculated as a percentage of the financed amount and your rate will be based on your credit score and other factors.
Admin fees: In addition to interest, you may have to pay account, admin or facility fees. There may also be penalties for late or missed payments.
End of lease costs: If the borrower is to buy the asset at the end of the finance term, there will be a purchase amount.
Other costs: Depending on the finance arrangements, you may need to pay for the asset's insurance, maintenance, and repairs.
Is asset finance just for business? Can I finance personal assets too?
Yes. Asset finance can also be used as an affordable, flexible way to purchase personal big ticket items, including vehicles, caravans, boats, motorbikes, recreational vehicles, and equipment such as home appliances, computers and technology. We would be pleased to help you look at your options!
Using an experienced asset finance expert like My Finance Agent ensures you get quality advice and compare a panel of lenders to get the best personalised rate.
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