Asset Finance Rates Comparison
Use Lend to access asset finance quotes from up to dozens of leading Australian lenders.
How Lend helps you get the best asset finance
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We work with asset finance specialists all over Australia to find you the best rates.
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Whether you want an asset loan or lease, balloon copayment or not, we can find a finance option to suit. A Lend asset finance specialist will guide you on your borrowing capacity and eligibility, and manage your loan from application to funding.
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Key points about business asset finance
Every business needs assets, whether that’s vehicles, equipment, plant or machinery. But, these can be expensive, which is where asset finance can help by spreading the cost of those assets over time.
- Asset finance is generally secured by the asset(s) you purchase
- Interest rates on asset finance can range from 5-20% p.a.
- Asset finance providers offer loan and lease options
- Interest, lease payments and depreciation may be tax deductible depending on the type of financing agreement you have
Compare asset finance interest rates
Asset finance option | Interest rate range |
|---|---|
Chattel mortgage | 6-10% p.a. |
Hire purchase | 7-15% p.a. |
Operating lease | 5-15% p.a. |
Finance lease | 6-15% p.a. |
What exactly is asset finance?
Asset finance or equipment finance, is a loan or lease that allows you to buy big-ticket items like vehicles, equipment or machinery for your business. The finance is secured against the asset you’re purchasing and repayments are spread over its expected lifespan, reducing the impact on your cashlow. Repayments are usually fixed, over a fixed term.
In the context of asset finance, an ‘asset’ can be anything your business needs to operate, including IT equipment or everyday equipment (e.g. coffee machines, printers), technology, cars, machinery, trucks etc. Each industry will have specific assets they need to conduct business.
Small business finance providers offer both asset loan and lease options. The best solution for your business will depend on:
- The type of asset you want to finance
- If you want to purchase or rent the asset
- If you want to own the asset at the end of the term
- Tax deductions available
Asset finance example
Let’s consider an example based on a fictional company called TechHub looking for asset finance of $20,000.
TechHub needs more advanced computing equipment to grow the business and will probably need to upgrade them every two or three years. The cost of the new equipment is $20,000, but TechHub uses asset financing to spread the cost over three years, repaying a manageable $655 a month, including interest (11% p.a.).
It’s a much better option than spending $20,000 upfront which would dent its cash reverses or impact its ability to offer payment terms to customers.
At the end of the three years, TechHub can upgrade its IT equipment by taking out a new financing contract to spread the cost over another three years, or can opt to sell the equipment if the contract allows it.
How much can you borrow with asset finance?
Borrowing amounts for asset finance can range from $5,000 to $1 million, depending on the value of the asset and your business creditworthiness (credit rating & revenue). You can use our equipment finance calculator to estimate your repayments based on different loan amounts.
Compare asset finance options for your business
Asset finance options
With hire purchase finance, the lender will buy the asset on your behalf and lease it back to your business over a period of time. You’ll make regular payments over the term and ownership of the asset will be transferred to your business after the final payment. At that point, you can sell the asset or continue to use it in your business as you please.
Repayments
You’ll usually agree to the finance terms upfront, including the hire purchase period, how much of a deposit you’ll pay, and whether you’ll pay for the asset in equal instalments or make a balloon payment at the end of the term. If you plan to sell the asset at the end of the contract, you could use the proceeds to cover the cost of the balloon.
Be aware that getting out of a hire purchase agreement early will mean incurring a hefty early termination fee, which could be a problem if you no longer need or can afford the asset.
An operating lease is more suitable for assets you might want to upgrade regularly, like vehicles, IT equipment, payment or telecommunications systems, etc. It's a useful option if you know you won't need the assets or equipment for their entire lifespan and want to avoid getting stuck with assets that have become obsolete.
Repayments
With an operating lease, the lender will buy the asset on your behalf and rent it to you in exchange for regular payments over a fixed period of time. The main difference to other asset finance options is that you never get ownership of the asset. This means you won’t build equity or be able to sell the asset for a profit at the end of the term.
That’s great if you just want to upgrade and move on, and don’t want the hassle of disposing of the asset. But it does mean you’ll be forced to take out more finance and replace the asset if you still need it.
The main difference between an operating lease and a finance lease is what happens at the end of the contract. With a finance lease, you’ll have the option to buy the asset at the end, and you also have the chance to make a profit on that purchase.
Repayments
You’ll still have to make fixed repayments over a period of time before you can claim ownership. You’ll pay close to the full value of the asset (plus interest) throughout your contract, which can make it a pretty expensive option.
Your lender will tell you how much you can expect the asset to be worth by the end of the contact, and your final payment will be based on that anticipated value. If the asset turns out to be worth more when the contract ends, you’ll only have to pay the amount agreed in advance, and you can then sell the asset for its higher value. But, if the market value is lower, your business will take the loss.
Should you use finance for an asset purchase?
Pros
• Wide choice of lenders
Many lenders offer asset finance, making it easier to find an option that suits your business needs.
• Predictable repayments
Fixed interest rates and monthly payments help you manage your cashflow more effectively.
• Flexible finance types
Choose from loan or lease options depending on how you want to use or own the asset.
• Asset ownership options
You may own the asset from day one or at the end of the finance term, depending on the structure.
• Tax advantages
GST credits and other deductions may apply, depending on your business and the asset.
Cons
• Costly to exit early
Some finance contracts include break fees or restrictions that make early termination expensive.
• Higher total cost
Financing generally costs more over time compared to buying the asset outright with cash.
• Risk of outdated assets
Long lease terms can leave you stuck with obsolete equipment before the contract ends.
• Restrictions on asset use
Depending on the contract, you may be limited in how you use, modify or sell the asset.
How to apply for asset finance
1
Meet the eligibility criteria
You must be an Australian citizen or permanent resident, over 18 years, with an ABN/ACN, be registered for GST and have been trading for at least six months with sufficient revenue to cover the loan repayments.
2
Compare rates
Look at as many lenders as you can. Working with a broker will help you compare options without it impacting your credit report. We’ll also be able to guide you on lender’s credit criteria and which ones are most likely to approve you.
3
Get ready to apply
You’ll need to provide the lender with information on your business, your preferred loan amount, duration and repayment structure, plus info about the asset you want (age, purchase price and where you plan to buy it).
4
Submit business documents
To assess your asset finance application, the lender will want to see the last six months of your bank statements, a Business Activity Statement (BAS) and your most recent tax return.
5
Credit check
The lender will also perform a credit check to ensure there are no serious outstanding credit infringements.
More info about asset finance
FAQs
Interest rates on asset finance can range from 5-20% p.a. Lenders will determine your individual rate based on your business risk profile and the strength of your application. Unsecured asset finance generally fetches higher rates to reflect the added risk to the lender.
Asset finance is generally secured against the asset you purchase. However, some businesses may use unsecured business loans for a variety of purposes, including to buy assets. These typically have higher rates and lower borrowing limits than secured finance.
You don’t normally need a deposit for asset finance because the asset itself serves as security for the loan, and the lender will finance 100% of the value of the asset or equipment. However, some hire purchase agreements may require you to pay a deposit and the rest of the finance balance as normal.
Asset finance offers various tax advantages depending on the type of agreement you have. The interest portion on loan repayments or lease payments are generally tax deductible as a business expense. You can also claim depreciation of the asset with a chattel mortgage or hire purchase agreement. Speak to a broker or accountant about the best option for business.
Yes, you may still qualify for asset finance if you have impaired credit, but be prepared to pay a higher rate of interest to reflect the added risk. Lenders will consider both your business creditworthiness and loan serviceability when assessing your application. You could alternatively look at bad credit business loans.