Equipment Finance

Finance for a wide range of assets, including cars, trucks, trailers, buses, fit-outs, medical equipment, construction equipment and more. There are a range of loan options with differing ownership structures and tax treatments, so it is best to seek advice from your accountant on the most suitable option for your current situation.

Commercial Hire Purchase - Under this structure the lender purchases the equipment on your behalf.  You then buy it off them in instalments. This means you do not own the equipment until the loan is repaid. At the end of the term, when you pay off the entire loan, you take ownership of the equipment. A balloon payment may be involved.

Finance Lease - Like a commercial hire purchase, with a finance lease, the lender purchases the equipment from the supplier. With a finance lease, they lease it to you for an agreed period. You do not own the asset, and you have to make repayments until the end of the loan term. When the lease expires, you could continue leasing the equipment, offer to purchase it or return it.

Operating Lease - Similar to a finance lease, however, when the lease agreement ends, the equipment is returned to the lender. A benefit of an operating lease vs finance lease is that working capital is maintained, and rentals are tax deductible - if the equipment is used to generate taxable income. There is no resale value risk as the lender owns the asset. There is also the option of operating leases which include ongoing maintenance costs such as equipment servicing and fuel costs all in one regular monthly payment. This can aid business cash flow as precise equipment running costs are known. 

Chattel Mortgage - Unlike the lease options, with a Chattel Mortgage the lender advances the funds for the purchase of the equipment and the borrower takes ownership at the time of purchase. The lender puts a charge over the property as security. Once the facility is fully paid, the charge is removed, and the borrowers has clear title of the equipment.

A balloon payment is a lump sum payable to the lender at the end of your loan term. These are normally 20-40% of the loan value. This payment will cover the remaining balance to pay out the loan. 

With balloon payments, your monthly repayments are smaller, however at the end of the term you have one large balloon payment remaining. It can be a large payment, so you need to make sure you have the finances to pay it. 

Imagine you were taking out a vehicle loan for $75,000. With a 33% balloon payment your monthly payments would be based on $50,000 rather than $75,000. This can help with cash flow. At the end of the term however, you would have a balloon payment of $25,000 to pay.