Commercial Asset Finance vs Equipment Loans
What Australian Businesses Need to Know
Australian businesses often use the terms “commercial asset finance” and “equipment loans” interchangeably. While they overlap significantly, they are not exactly the same.
Understanding the difference can save you thousands in interest, improve your cash flow and ensure you choose the best tax structure. This guide clearly explains both options, compares them side-by-side and helps you decide which is right for your business.
What Is Commercial Asset Finance?
Commercial asset finance is the broad umbrella term for any finance secured against a business asset. It includes:
- Equipment loans
- Vehicle and truck finance
- Plant and machinery finance
- Aircraft and marine finance
- Property-backed business loans
- Debtor/invoice finance (in some cases)
The key feature is that an asset acts as security, which usually means lower interest rates and higher approval amounts.
What Is an Equipment Loan?
An equipment loan is a specific subset of asset finance. It is used exclusively to purchase or refinance tangible, income-producing equipment such as:
- Excavators, loaders and cranes
- Commercial vehicles and fleets
- Medical and dental equipment
- Manufacturing machinery
- Café and restaurant fit-outs
- IT and office equipment
- Farming and agricultural plant
In Australia, “equipment loan” almost always refers to chattel mortgage, hire purchase or finance lease structures.
Side-by-Side Comparison (2025–26)
| Feature | Commercial Asset Finance | Equipment Loan |
| Scope | Broad – any business asset | Narrow – only equipment/plant |
| Typical Assets | Equipment, vehicles, property, debtors, aircraft | Excavators, trucks, medical gear, fit-outs |
| Loan Purpose | Purchase, refinance, cash-out, working capital | Almost always purchase or refinance of equipment |
| Security | The financed asset + sometimes additional security | Usually only the equipment itself |
| Interest Rates (fixed) | 6.0 % – 14 % p.a. | 6.5 % – 12 % p.a. |
| Term Length | 6 months – 30 years | 1 – 7 years (rarely longer) |
| GST Treatment | Varies by structure | Immediate reclaim (chattel) or spread (lease/CHP) |
| Tax Deductions | Varies widely | Interest + depreciation (highly tax-effective) |
| Residual/Balloon Common? | Sometimes | Very common to lower monthly repayments |
| Approval Speed | 1 – 10 days | Same-day to 48 hours |
| Best For | Mixed assets, property, large facilities | Specific equipment purchases |
When to Choose Commercial Asset Finance
Choose broader commercial asset finance if:
- You are buying or refinancing commercial property as part of the deal
- You need cash-out against existing unencumbered assets
- You are funding a fleet plus fit-out plus working capital in one facility
- The loan exceeds $1–2 million and includes multiple asset classes
- You want a longer term (10–25 years)
Examples:
A transport company borrowing $4 m against trucks + depot property
A medical practice buying the building and the MRI machine in one loan
When to Choose a Dedicated Equipment Loan
Choose a specific equipment loan if:
- You are buying one or several pieces of plant or machinery
- You want the fastest approval and settlement (often 24–48 hours)
- You are GST-registered and want to claim the full GST back immediately (chattel mortgage)
- You want the lowest possible rate with the equipment as the only security
- You prefer a shorter term (2–7 years) with a balloon to match the asset’s useful life
Examples:
A civil contractor buying a $650,000 excavator
A café owner installing a $120,000 fit-out and coffee equipment
A dental practice purchasing a $280,000 CBCT scanner
Tax Implications – A Major Difference
| Structure | Typical Product Used | GST Recovery | Main Tax Benefit |
| Pure Equipment Loan | Chattel Mortgage | Full GST on next BAS | Interest + accelerated depreciation |
| Broader Asset Finance | Commercial loan or property combo | Often deferred or partial | Interest-only deductions; longer depreciation |
For most trading businesses in 2025–26, a dedicated equipment loan (chattel mortgage) remains significantly more tax-effective than a general commercial asset finance facility.
Current Interest Rate Snapshot (December 2025)
- Dedicated equipment loans (chattel mortgage) Major banks: 6.5 % – 8.2 % Specialist lenders: 7.2 % – 11.5 %
- Broader commercial asset finance Secured against mixed assets: 6.8 % – 13 % With property security: as low as 6.0 % (but longer term)
Which One Costs You Less?
In almost all cases under $2 million for equipment-only purchases, a dedicated equipment loan will have:
- A lower interest rate
- Lower or zero establishment fees
- Faster settlement
- Better tax outcomes
Once you move above $2–3 million or include property, a broader commercial asset finance facility often becomes cheaper and more flexible.
Real-World Examples
Example 1 – Café Fit-Out ($180,000)
Best option → Dedicated equipment loan (chattel mortgage)
- Rate ~7.4 % fixed
- Full $16,363 GST back next BAS
- 5-year term with 20 % balloon
- Total interest paid lower than a general business loan
Example 2 – Medical Centre ($2.8 m total)
$1.8 m property + $1 m equipment
Best option → Single commercial asset finance facility secured by property + equipment
- Rate ~6.3 %
- 15–20 year term
- One set of fees and valuations
Frequently Asked Questions
Are the lenders different?
Yes. Equipment loans are dominated by specialist asset finance lenders (Macquarie, Metro, FlexiCommercial, Shift). Broader commercial asset finance often involves the major banks or private credit funds.
Can I roll multiple assets into one equipment loan?
Yes – many lenders happily finance mixed yellow goods, vehicles and fit-outs under one equipment finance facility.
Is private sale equipment harder to finance?
Slightly. Auction or private-sale assets usually require a larger deposit (10–30 %) and higher rate.
Final Verdict
For the majority of Australian businesses buying specific plant, machinery or vehicles in 2025–26, a dedicated equipment loan (usually a chattel mortgage) is faster, cheaper and far more tax-effective than a general commercial asset finance facility.
Only choose broader commercial asset finance when you need to include property, require cash-out, or are borrowing very large amounts across multiple asset classes.
At Finance Finance Finance, our brokers instantly know which structure and which of our 40+ lenders will save you the most money. We handle everything from application to settlement – at no cost to you.
Need the best deal on equipment or broader asset finance? Contact our team today for a free comparison.
