Equipment and Vehicle Finance for Australian Businesses: A Complete Guide
Quick answer
- Equipment and vehicle finance, also called asset finance, lets a business acquire vehicles, machinery, or equipment and pay for it over a set term, usually with the asset itself as security.
- The main structures are a chattel mortgage, a finance lease, and a rental or operating lease, which differ in who owns the asset and how it is taxed.
- Both new and used assets can usually be financed, though age and type affect the term offered.
- Tax treatment depends on the structure, so confirm current rules with your accountant and the ATO.
The finance decision behind every business asset
Equipment and vehicle finance lets an Australian business acquire the assets it needs, such as a work vehicle, machinery, or tools of trade, and spread the cost over a set term, usually with the asset itself as security. This matters because paying cash for a large asset can drain the working capital a business relies on for wages, stock, and daily operations.
Getting the structure wrong carries a real cost: a weaker tax position, repayments that do not match how the asset earns, or a term that outlasts the equipment.
What is equipment and vehicle finance?
Equipment and vehicle finance is a form of asset finance, where a lender funds a business asset and the business repays it over an agreed term. The asset acts as the security, meaning the lender holds an interest in it until the finance is repaid.
Security is simply something the lender can rely on if the loan is not repaid, and providing it is why asset finance is often more accessible than unsecured borrowing. It covers utes, vans, and trucks, plus machinery, plant, trade equipment, fit out, and technology.
What are the main types of asset finance?
The main types are a chattel mortgage, a finance lease, and a rental or operating lease, and they differ mainly in ownership and tax treatment.
| Structure | Who owns the asset | Typical use | Key feature |
| Chattel mortgage | The business, from day one | Assets kept long term | Lender registers a security interest; often paired with a balloon |
| Finance lease | The lender | Assets you intend to keep or buy out | A residual value is set for term end |
| Rental or operating lease | The lender | Assets that date quickly, such as technology | Use without ownership; return or renew |
A balloon payment, listed above, is a larger lump sum owed at the end of the term. It lowers regular repayments but leaves an amount to settle or refinance later.
When a chattel mortgage suits: you want to own the asset and keep it for its working life. When a lease suits: you prefer the lender to hold ownership, or you expect to replace the asset regularly.
Can you finance new and used assets?
Yes, both new and used equipment and vehicles can usually be financed, though age and condition affect the offer. Lenders match the term to the expected remaining life of the asset, so an older item may attract a shorter term. Our Velonda Drive product covers exactly this, financing vehicles and equipment whether new or used.
Standard vehicles and common machinery with an active resale market are generally straightforward, while specialised or rapidly depreciating equipment is assessed more closely. If you are buying privately or at auction rather than from a dealer, say so early, as it changes the documents required.
What are the tax implications?
Tax treatment depends on the structure and your circumstances, so this is general information only and you should confirm current rules with your accountant and the ATO.
Businesses with an aggregated annual turnover of less than $10 million that use simplified depreciation may immediately deduct the business portion of eligible assets costing less than $20,000, on a per asset basis, for the 2023-24 through 2025-26 income years (ato.gov.au, instant asset write-off, checked 24 August 2026). Aggregated turnover includes your business plus affiliated or connected entities.
For cars, the car limit caps the value you can depreciate. For 2025-26 it is $69,674, and the maximum GST credit on a car is generally one eleventh of that limit, being $6,334 (ato.gov.au, car cost limit, checked 24 August 2026). Structure matters too, since a chattel mortgage, a finance lease, and a rental are each handled differently for depreciation, GST, and deductions.
What do lenders look at when assessing an application?
Lenders assess the asset, the business, and how the finance is structured, rather than a single number. The asset is central, because its type, age, and resale value support the security.
On the business side, a lender typically considers trading history, cash flow, and existing commitments. A personal guarantee is often involved, which is a promise by a director to cover the debt if the business cannot, so understand it before signing. Approval, rate, term, and limit are always subject to assessment and eligibility, and no lender can promise an outcome in advance.
How do repayments, terms, and balloon payments work?
Repayments are usually fixed over the term, which makes budgeting predictable, and the term is set to match the working life of the asset. Shorter terms mean higher repayments but less interest overall, while longer terms ease cash flow but cost more overall.
A balloon or residual lowers regular repayments by leaving a lump sum at the end. That can help cash flow, but the amount still has to be paid, refinanced, or covered by selling the asset, so plan for it rather than treating it as deferred. Steady income can support a longer term, while a fast depreciating asset may suit a shorter one.
What are the risks and costs to weigh up?
The main considerations are total cost over the term, the security position, and the fit with your cash flow. Because the asset is security, falling behind can put it at risk, and a personal guarantee extends that exposure to a director.
Look beyond the headline repayment, as establishment fees, ongoing account fees, and any early payout costs affect the true cost. Ask for the full breakdown before committing.
Decision summary
Match ownership, tax treatment, and term to how you will actually use the asset. A chattel mortgage tends to suit assets you want to own and keep, while a lease or rental can suit assets you replace often. Plan for any balloon well before it falls due, and confirm the tax position with your accountant, since structure changes the outcome and thresholds shift year to year.
About Velonda Capital
We are Velonda Capital, an Australian-owned, Melbourne-based business finance company. We lend for business purposes only and are not a bank, and we price each facility individually. To talk through your options or have an indicative discussion, get in touch with our team.
Frequently asked questions
Do I need a deposit for equipment or vehicle finance?
Not always, since the asset usually provides the security, though a deposit or trade in lowers the amount financed.
Can a sole trader or new business get asset finance?
Yes, both can apply, though with limited trading history a lender looks more closely at cash flow, the asset, and often a director guarantee.
How long does approval take?
It varies with the asset and your documents, so no lender can promise a timeframe, and approval remains subject to assessment.
Will asset finance affect my ability to borrow later?
It can, because other lenders see the commitment, so the impact depends on the asset value against the amount still owed.