Equipment Finance vs Equipment Loans — What’s the Difference?
Last updated: November 2024
Business Finance Insights by Casey Asset Finance — helping Australian Small Business Owners access smarter funding.
If you’re buying new or used equipment for your business, you’ve probably seen both terms — equipment finance and equipment loans.
They sound the same, but the difference matters.
Choosing the right structure can help you:
✅ Reduce tax.
✅ Improve cash flow.
✅ Secure ownership faster.
In this guide, we’ll break down the differences in plain English — and show you how to choose what’s right for your business.
What Is Equipment Finance?
Equipment finance is a broad term that covers different ways to fund business assets, such as vehicles, machinery, tools, or technology.
Rather than paying upfront, you use finance to spread the cost and preserve cash flow.
Common types of equipment finance include:
Chattel Mortgage – You own the asset immediately, claim GST and depreciation, and the lender holds security until the loan is repaid.
Finance Lease – You rent the asset for a fixed period, then return or purchase it at the end.
Hire Purchase – The lender owns the asset during the term, and ownership transfers to you after the final repayment.
Key takeaway: Equipment finance is the category — it includes several funding methods designed for different business goals.
What Is an Equipment Loan (Chattel Mortgage)?
An equipment loan, also called a chattel mortgage, is the most common form of equipment finance used by Australian businesses.
Here’s how it works:
You own the asset from day one.
The lender takes a mortgage over the asset as security until the loan is repaid.
You can claim GST upfront and depreciate the asset over time.
Repayments are fixed over a term (usually 2–5 years).
It’s straightforward, flexible, and ideal for businesses that want ownership and control without tying up cash.
Example:
A plumbing business buys a $45,000 excavator using an equipment loan.
They own it immediately, claim GST and depreciation, and make fixed repayments that suit their cash flow.
The Key Differences (In Plain English)
Equipment finance (Category)
Ownership: You can own (via chattel mortgage) or lease (via finance lease or hire purchase).
Tax benefits: Depending on structure, you can claim GST, depreciation, or lease payments as deductions.
Flexibility: Multiple structures available tailored to your cash flow and goals.
Documentation: Low-doc and full-doc options available.
Approval: Fast often within 24-48 hours.
Equipment Loan (Chattel Mortgage)
Ownership: You own the asset immediately; lender holds mortgage until repaid.
Tax benefits: GST claimable upfront, plus depreciation and interest deductions.
Flexibility: Fixed loan structure — simple and predictable.
Documentation: Low-doc and full-doc options available.
Approval time: Fast — often within 24-48 hours.
Which Option Is Right for You?
✅ Choose Equipment Finance if:
You want flexibility between ownership and leasing.
You’re buying assets with varying lifespans.
You want to optimise tax strategy (e.g. leases vs chattel mortgage).
💡 Example:
A manufacturer finances several machines using a mix of leases and chattel mortgages.
This lets them spread repayments while maintaining working capital for raw materials.
✅ Choose an Equipment Loan (Chattel Mortgage) if:
You want to own the equipment immediately.
You prefer fixed repayments and long-term stability.
You want to claim GST and depreciation for tax efficiency.
💡 Example:
A construction company uses an equipment loan to buy a new prime mover.
They own it outright, claim tax benefits, and manage predictable repayments over 5 years.
Can You Get Equipment Finance With Low Docs or Bad Credit?
Absolutely.
Many Australian lenders now offer low-doc or bad-credit equipment finance options.
Instead of full financial statements, approval can be based on:
ABN and ID
Credit recommendation
3–6 months of business bank statements
This is ideal for self-employed operators, start-ups, or growing businesses that don’t have up-to-date tax returns.
👉 Learn more: Low-Doc Business Loans Australia
Why Work With a Broker Instead of a Bank?
Banks typically offer just one or two finance options — and often move slowly.
At Casey Asset Finance, we compare 40+ specialist lenders to find the best rate and structure for your business.
That means:
✅ Faster approvals.
✅ Smarter tax outcomes.
✅ No unnecessary credit checks.
We know which lenders are currently funding your asset type — whether it’s vehicles, machinery, or technology.
Final Thoughts
Both equipment finance and equipment loans (chattel mortgages) help Australian businesses grow — but how you structure them makes the difference.
If you want flexibility and tax efficiency, equipment finance is the broader solution.
If you want ownership and simplicity, an equipment loan (chattel mortgage) is your best bet.
Need help choosing the right one for your business?
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About the author
Michael Pajar is the Director of Casey Asset Finance, a Melbourne-based business finance brokerage helping Australian SMEs secure funding through fast, transparent, and responsible lending solutions.
Call Michael on - 0450 622 115
Or email me at - michael@caseyassetfinance.com.au
