Asset Finance Guide
Finance business equipment competitively. Learn about chattel mortgages, operating leases and vehicle financing solutions.
What is Asset Finance?
Asset finance is borrowing secured against moveable business assets (vehicles, equipment, machinery). The asset serves as security, allowing lower interest rates and longer terms than unsecured lending.
Common Asset Finance Uses
- Commercial vehicles (trucks, vans, utes)
- Construction equipment and machinery
- Office equipment (computers, printers, furniture)
- Manufacturing equipment and production tools
- Agricultural machinery and equipment
- Medical and specialized equipment
Asset Finance Structures
Chattel Mortgage
You own the asset immediately. Lender holds mortgage over it. Pay down debt like a car loan. 50-80% LVR typical.
Equipment Lease
Lessor owns asset; you rent it. Fixed monthly payments. Option to purchase at end. Good for short lifecycles.
Hire Purchase
Hybrid model. You possess and use asset; lessor retains ownership until final payment. Then ownership transfers.
Conditional Sale Agreement
You own immediately but lender retains security interest until debt is paid. Similar to chattel but faster ownership transfer.
Asset Finance Costs & Terms
Interest Rates
4.5% - 9% p.a. (secured against asset)
Loan Terms
1 - 7 years depending on asset life
LVR Range
50% - 80% of asset value
Establishment Fee
1% - 2% of loan amount
Monthly Fee
$0 - 50 depending on lender
Gap Insurance
Optional: protects if asset is stolen/damaged
Asset Finance vs Unsecured Loans
| Factor | Asset Finance | Unsecured Loan |
|---|---|---|
| Interest Rate | 4.5% - 9% | 7.9% - 15% |
| Loan Term | Up to 7 years | Usually 1-5 years |
| Security | Asset (chattel mortgage) | Personal guarantee only |
| Approval | 5-10 business days | 2-5 days |
| Tax Deduction | Depreciation + interest | Interest only |
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