What Is Asset Finance?
Asset finance is a powerful funding solution that helps Australian businesses acquire the equipment, vehicles, and machinery they need without paying the full amount upfront. Whether you're buying new equipment, upgrading existing equipment, or expanding your operations, asset finance allows you to preserve working capital while still accessing the tools essential to your business.
At its core, asset finance uses the equipment itself as collateral for the loan. This means the vehicle, factory machinery, or office equipment you're purchasing secures the finance, which can make approval more straightforward compared to unsecured lending options.
For businesses in Greensborough and across Melbourne's northern suburbs, asset finance opens doors to acquiring everything from work vehicles and specialised machinery to the latest equipment that keeps you ahead in your industry.
Types of Asset Finance Available
When it comes to funding business equipment, there are several finance options to consider. Each structure offers different benefits depending on your business needs and circumstances.
Chattel Mortgage
A chattel mortgage is one of the most popular choices for businesses purchasing assets. You own the equipment from day one, with the lender holding a mortgage over it until you've made the final payment. This option typically offers tax benefits through depreciation claims and allows you to claim GST credits on eligible purchases. You'll make fixed monthly repayments over the loan term, with the option to include a balloon payment at the end to reduce your regular payments.
Finance Lease
With a finance lease, the lender owns the equipment throughout the life of the lease, and you have the option to purchase it at the end for a predetermined amount. This structure can help manage cashflow effectively, as the GST treatment allows you to claim input tax credits on lease payments rather than the full purchase price upfront.
Operating Lease
An operating lease works well for businesses that want to regularly upgrade equipment without the commitment of ownership. You lease the equipment for a set period, make regular payments, and return it at the end of the term. This option suits businesses with a short upgrade cycle or those wanting to access the latest equipment without long-term ownership obligations.
Hire Purchase
Similar to a chattel mortgage, hire purchase allows you to acquire assets through fixed monthly repayments. The key difference is that ownership transfers only after the final payment is made. This option provides certainty around costs and helps preserve capital for other business priorities.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Premier Path Finance today.
What Can You Finance?
Asset finance covers a remarkably broad range of business equipment and vehicles. Here are some common categories:
Commercial Vehicle Finance
From utes and vans to entire fleet finance solutions, commercial vehicle finance helps you acquire the transportation your business relies on. Whether you need one truck or multiple work vehicles, tailored finance packages can accommodate your requirements.
Construction Equipment Finance
The construction industry requires significant investment in machinery. Finance options are available for excavators, graders, cranes, dozers, and other heavy equipment that would otherwise require substantial capital outlay.
Medical Equipment Finance
Healthcare practices can access medical equipment finance for everything from diagnostic machines to treatment equipment, allowing practitioners to offer modern services to their patients.
Hospitality Equipment Finance
Restaurants, cafes, and hotels can fund commercial kitchens, refrigeration systems, and other hospitality equipment through specialised finance arrangements.
Technology Equipment Finance
Stay current with technology equipment finance that covers computers, servers, software, and IT infrastructure essential to modern business operations.
Office Equipment
From furniture to photocopiers, office equipment can also be financed, spreading the cost over time rather than impacting your working capital.
Specialised Machinery
Manufacturing businesses can fund factory machinery, tractors, trailers, and industry-specific equipment tailored to their operational needs.
Key Benefits of Asset Finance
Understanding the advantages of asset finance helps you make informed decisions about funding your business equipment needs.
Preserve Working Capital
Rather than depleting your cash reserves, asset finance allows you to preserve capital for day-to-day operations, emergency funds, or other investment opportunities that arise.
Tax Benefits
Many asset finance structures offer significant tax benefits. Depending on the arrangement, you may be able to claim depreciation, interest deductions, and GST credits. It's worth consulting with your accountant to understand how these benefits apply to your specific situation.
Manage Cashflow
Fixed monthly repayments make budgeting straightforward. You'll know exactly what you're paying each month, which helps with financial planning and cashflow management.
Access Modern Equipment
Asset finance enables you to access the latest equipment without waiting until you've saved enough capital. This can be crucial in industries where having current technology or machinery provides a genuine advantage.
Flexible Structures
With options like balloon payments, you can tailor repayment structures to suit your business's income patterns and cashflow requirements.
Understanding Interest Rates and Loan Amounts
The interest rate you'll pay depends on various factors, including your business's financial position, the type of equipment being financed, and the loan amount. Asset finance can accommodate everything from smaller office equipment purchases to substantial machinery acquisitions worth hundreds of thousands of dollars.
Lenders across Australia offer different rates and terms, which is where working with an experienced finance broker becomes valuable. At Premier Path Finance, we access Asset Finance options from banks and lenders across Australia, comparing products to find arrangements that align with your circumstances.
Vendor Finance and Dealer Finance
Some equipment suppliers offer vendor finance or dealer finance arrangements. While convenient, it's worth comparing these offers against other market options. Sometimes manufacturer-backed finance is highly suitable, but other times, independent financing through banks or specialist lenders may offer more flexibility or better terms.
Asset Based Lending and Equipment Leasing
Asset based lending uses your business's equipment and other assets to secure funding. This approach can be particularly useful for businesses that may not qualify for traditional lending but have valuable equipment or machinery to use as security.
Equipment leasing provides another pathway, allowing you to use equipment without purchasing it outright. Depending on your upgrade cycle and how quickly your industry evolves, leasing might be more suitable than ownership.
Special Considerations for Greensborough Businesses
Businesses in Greensborough benefit from the area's strong commercial and industrial presence. Whether you're in manufacturing, construction, healthcare, hospitality, or professional services, the right equipment finance can support your business growth ambitions.
For business owners in Greensborough looking at business loans or commercial loans, asset finance often works alongside these products as part of a broader funding strategy.
Getting Started with Asset Finance
When you're ready to explore machinery purchase funding or business equipment funding, the process typically involves:
- Identifying the equipment you need and its cost
- Determining which finance structure suits your business
- Gathering financial documentation about your business
- Comparing offers from different lenders
- Completing the application process
- Receiving approval and acquiring your equipment
Working with a knowledgeable broker who understands asset finance fundamentals and has relationships with multiple lenders can streamline this process significantly.
Whether you're a mortgage broker in Greensborough, VIC client looking to expand your business premises or a local tradesperson needing new work vehicles, asset finance provides flexible pathways to acquiring what you need.
Your Next Step
Asset finance isn't one-size-fits-all. The right solution depends on your industry, equipment type, business structure, and financial goals. Understanding the fundamentals helps you ask the right questions and make informed decisions about funding your business equipment.
If you're considering commercial equipment finance, construction equipment finance, or any other form of asset funding, speaking with professionals who specialise in business lending can clarify your options and help you find arrangements that support your objectives.
Call one of our team or book an appointment at a time that works for you. We'll discuss your equipment needs, explain the various finance options available, and help you access suitable solutions from our network of lenders across Australia.
