Equipment and Asset Finance in Australia: What Business Owners Need to Know in FY27
Most business owners approach equipment finance the same way they approach most lending decisions: go to the bank, ask for the finance, accept the rate, move on. In FY27, that approach is costing Australian businesses more than they realise. Equipment finance rates currently range from 6.50% to 11% or more depending on lender, asset type, business profile and how the transaction is structured and presented. That is a spread of more than 4%, which on a $500,000 equipment finance deal represents a difference of over $20,000 in total interest over a standard five-year term.
The gap between the rate a well-prepared business receives and the rate a poorly structured application attracts is not a small rounding error. It is a material cost that compounds across every asset the business finances.
What Is Equipment and Asset Finance in Australia?
Equipment and asset finance is a lending structure that allows businesses to acquire vehicles, machinery, technology and other productive assets without paying the full purchase price upfront. The asset itself typically serves as security for the finance, which reduces lender risk and generally produces lower rates than unsecured borrowing. In FY27, established businesses with strong documentation can access secured equipment finance from around 6.50% per annum, while newer businesses or those with complex income structures typically sit higher in the range.
The right structure depends on the asset type, the business’s tax position and how ownership needs to be treated on the balance sheet. Finance leases, chattel mortgages, hire purchase agreements and operating leases all produce different outcomes from a tax, cash flow and ownership perspective, and the wrong structure for the business’s situation can cost more than a higher interest rate.
Why Do Equipment Finance Rates Vary So Much Between Lenders in Australia?
Equipment finance rates in Australia vary by 3% to 5% or more between lenders for the same transaction, because each institution assesses risk differently, has different appetite for specific asset types and sectors, and prices its product accordingly. A transport business financing new trucks will attract very different rates across different lenders. A healthcare business financing specialist medical equipment will similarly see significant variation. The rate a business receives from its existing bank is rarely the rate the market would produce under genuine competition.
Three rate hikes in the first half of FY27 pushed the cash rate from 3.60% to 4.35%, and equipment finance rates adjusted accordingly in the weeks following each announcement. That rate environment has made the difference between a well-sourced deal and a poorly sourced one more consequential than it was two years ago.
What Are the Different Types of Equipment Finance Available to Australian Businesses?
Australian businesses can access equipment finance through several distinct structures, each with different implications for ownership, tax treatment and cash flow. A chattel mortgage is the most common structure for GST-registered businesses, allowing the business to claim GST on the full purchase price upfront and claim interest and depreciation as tax deductions. A finance lease keeps the asset off the balance sheet and allows full lease payments to be claimed as deductions. A hire purchase agreement transfers ownership at the end of the term for a nominal amount. An operating lease allows the business to use the asset without owning it, which suits businesses that need to upgrade equipment regularly.
The right structure is not always the most obvious one. A business that defaults to a chattel mortgage because it is familiar may be missing meaningful tax or cash flow advantages available through a different product, particularly where the business has specific depreciation requirements or wants to preserve balance sheet capacity for other borrowing.
How Does Asset Type Affect Equipment Finance Rates in Australia?
The type of asset being financed directly affects the rate a lender will offer, because the asset’s resale value, useful life and demand in the secondary market all influence how much risk the lender is carrying. New assets generally attract lower rates than used equipment. Assets with strong secondary markets, such as commercial vehicles, earthmoving equipment and agricultural machinery, attract more competitive rates than highly specialised assets with limited resale appeal. The age, condition and market for the specific asset all form part of how lenders price the transaction.
This is one of the reasons that approaching equipment finance through an experienced advisor who understands how lenders assess specific asset classes produces better outcomes than going directly to a single institution. Different lenders have different appetites for different asset types at any given time, and matching the transaction to the right lender is as important as the rate itself.
What Does Working Capital Have to Do With Equipment Finance?
Equipment finance that ties up too much working capital can create cash flow pressure that undermines the operational benefit of the asset itself. A business that purchases equipment outright or structures finance poorly can find itself asset-rich and cash-poor at exactly the moment the asset is generating demand for operational expenditure.
Well-structured equipment finance preserves working capital by spreading the cost of the asset across its useful life, aligning the finance term with the income the asset generates and leaving cash available for wages, inventory, trade finance and other operational needs. For businesses with multiple asset requirements, a structured approach across equipment finance, working capital and commercial property can be considerably more efficient than managing each element separately.
We recently structured a working capital and equipment finance solution for a client in the security industry, where credit lines exceeding $25 million were secured across equipment finance and receivables finance, supported by the business’s forward projections. The result was a facility structure that supported growth without constraining the day-to-day operation of the business.
How Should Australian Businesses Approach Equipment Finance in FY27?
In FY27, the most effective approach to equipment finance involves three steps that most businesses skip entirely. First, understand which structure suits the business’s tax and cash flow position before approaching any lender. Second, approach multiple lenders through a broker who has relationships across a broad panel rather than going direct to a single institution. Third, ensure the submission presents the business’s trading history, forward projections and the asset’s role in the business strategy in a way that aligns with how credit teams assess risk.
Equipment finance rates can vary by 3% to 5% across the market for the same transaction. On a $500,000 deal over five years, the difference between the best available rate and the rate offered by the first lender approached can exceed $20,000. That saving is not achieved by luck. It is achieved by preparation, lender selection and structured negotiation. Learn more about Taper’s Equipment and Asset Finance services.
Talk to Taper about your equipment finance needs. Our team brings former senior banker experience to every transaction. No hand-offs. Direct access to experienced brokers who understand how lenders assess asset finance applications.
Frequently Asked Questions by Australian Business Owners
What are the current equipment finance interest rates in Australia?
In FY27, equipment finance rates for Australian businesses range from approximately 6.50% to 11% per annum for secured finance. Established businesses with strong financials and full documentation typically access rates at the lower end of this range. Newer businesses or those with complex income structures typically sit higher. Rates can vary by 3% to 5% between lenders for the same transaction, which is why comparing across a broad lender panel through an experienced broker consistently produces better outcomes than approaching a single institution.
What is the difference between a chattel mortgage and a finance lease for equipment finance?
A chattel mortgage involves the business taking immediate ownership of the asset while the lender holds a mortgage over it as security. The business can claim the full GST on the purchase price upfront and claim interest and depreciation as tax deductions. A finance lease keeps the asset off the balance sheet, with the full lease payment generally tax deductible. The right structure depends on the business’s GST registration, tax position and whether balance sheet ownership of the asset is important. An experienced advisor can assess which structure produces the best overall outcome for the specific circumstances.
Does the RBA cash rate affect equipment finance rates in Australia?
Yes. Equipment finance rates track the RBA cash rate with a margin on top. Following three cash rate increases in the first half of FY27, taking the cash rate from 3.60% to 4.35%, most lenders adjusted their equipment finance pricing accordingly. The cash rate is next reviewed on 29 September 2026. Businesses with significant equipment finance requirements may benefit from locking in fixed rate structures before any further rate movement.
Can a business access equipment finance without real estate security?
Yes. Equipment finance is typically secured against the asset being financed rather than real property. This makes it accessible for businesses that do not hold real estate or that want to preserve their property security capacity for other borrowing. The lender’s assessment focuses on the asset’s value and resale market, the business’s financial profile and trading history, and how the submission is structured and presented.
Talk to Taper about your equipment finance needs.
