What are the best equipment finance rates in Australia?
The best current equipment finance interest rates in Australia are:
- Chattel Mortgage Interest Rates - from 4.00%
- Commercial Hire Purchase Interest Rates - from 4.49%
- Finance Lease Interest Rates - from 4.49%
- Operating Lease Interest Rates - from 5.10%
- Unsecured Business Loan Interest Rates - from 9.90%
You can quickly compare interest rates and terms in the table below. However, it’s important to remember that interest rates will vary from lender to lender.
Best Equipment Finance Interest Rates Comparison
|Type of Finance||Interest Rates|
|Chattel Mortgage||From 4.00%|
|Commercial Hire Purchase||From 4.49%|
|Finance Lease||From 4.49%|
|Operating Lease (Rental Agreement)||From 5.10%|
|Unsecured Business Loan||From 9.90%|
Specialist Asset Finance lenders offer a streamlined application process and competitive interest rates, which often makes them more appealing to borrowers than banks.
How do I qualify for the best rate?
Equipment finance interest rates will vary depending on which type of business finance you choose to apply for. The main factor considered by lenders when applying a rate to any type of loan is the level of risk presented by the borrower.
The lower the risk, the lower the interest rates - if you have been in business for a long time and have a high, regular revenue, you’ll present far less risk to a lender than someone just starting a business without stable, annual revenue.
The interest rate will also depend on which lender you choose to apply with, and may also alter depending on:
- The amount you wish to borrow
- The type of asset or assets you wish to purchase
- Your time in business
- The monthly revenue of your business
- The term you are applying for
- Your business credit history
- Your personal credit history
- If you own a property
When assessing your application, lenders will consider five different factors to determine your level of risk. In the table below, you can see what these factors are, and how they might apply to your application.
How lenders assess your equipment finance application
- Credit rating - A list of defaults, bankruptcies and related information, and is usually retained for a period of seven years.
- Capacity - Your ability to repay the loan or lease from an assessment of your income and your current debts.
- Capital - Any deposit put toward the purchase of the assets you wish to finance. A deposit reduces the debt, and therefore the risk to a lender. If you are renting and do not own a home, lenders may ask for a deposit.
- Collateral - This is any asset that is used to secure the debt - whether you are required to supply collateral for equipment finance will depend on the type of finance you choose. Some assets - such as a car - can be used as collateral. Other assets - such as an office fit-out - can not.
- Conditions - The health of your business and what you’ll use the funds for. Lenders may also look at industry trends and anything that may affect your ability to repay the loan. This is a projected assessment of how the lender believes your business will perform over time.
Does the age or type of asset affect the interest rate?
The type of asset you wish to finance, and the age of that asset, will also determine how a lender applies an interest rate to your loan. This is important to understand for any type of equipment finance loan, but especially if you are considering loans for multiple assets of different types - such as a business vehicle, an office fit-out, and leased office equipment.
Below, you can see how the age and type of asset you wish to acquire through equipment finance may affect the interest rate applied to your loan.
How the age of the asset will affect your offered interest rate
|Brand-New||1 - 2 years old||2 - 5 years old||5+ years old|
How the type of asset will affect your offered interest rate
|From 4.00%||From 5.00%||From 6.50%||From 8.00%|
As you can see above, different types of assets will have different interest rates applied. A vehicle, for example, is a relatively secure asset that is designed to remain in good working order for a considerable amount of time. If you were unable to meet your repayments, a lender would be able to reclaim the vehicle and recoup a significant portion of their losses.
Electronics, on the other hand, aren’t as reliable as a car. They have a shorter operating lifespan and their value can drop significantly in only a few years. This is best illustrated by non-reclaimable assets acquired through business fit-out finance: as there is no way for a lender to reacquire a fit-out from a borrower, this type of asset presents the highest amount of risk.
Remember: The more risk you present to a lender, the higher your interest rates will be.
What do I need to apply?
There are two main types of applications for equipment finance in Australia: streamlined and standard. A streamlined application is the industry term for the simplest type of deal. The type of application will depend on:
- The type of asset or assets you wish to finance
- The value of those assets
- Your time in business
You’ll qualify for the streamlined process if you are:
- Buying a vehicle to the value of $150,000 and have been in business 12 months, or
- Buying any non-vehicle goods and assets up to a total value of $100,000 and have been in business 24 months.
Provided you can supply the appropriate documents to your lender and have a good credit history, you’ll likely be approved for your application. In all other instances than the two described above, you’ll need to go through a standard finance application.
You can still get a low interest rate through either application process. The rate you are offered will still be determined by the level of risk you present to a lender and the type of equipment finance you choose.
How do I apply?
Most banks will offer equipment finance options to their customers. Otherwise, you could choose to work with a finance broker, who will help manage your application process. Alternatively, there will be a number of non-bank lenders and specialist asset finance lenders who offer some - or all - types of equipment finance in Australia.
Specialist lenders will often have a simple, online process for applications, and many will offer conditional approval on the spot. Others may ask you to contact them for a quote, and then speak to you personally before finalising your application.
Each lender will have different finance products, rates and approval criteria. You can learn more about the different ways to apply by reading our Equipment Finance Guide.
You can usually get a quicker approval from a non-bank, specialist asset finance lenders, or through equipment finance brokers than your bank.
How can I compare interest rates for equipment finance?
The primary reason people look to compare interest rates on equipment finance is to ensure they get the best deal and the lowest monthly and total repayment amount possible. While an interest rate is a strong indicator of your total and regular repayments, there are other factors to consider as well, such as any initial or ongoing fees that may affect your total loan amount.
You can see in the table below how the monthly fees can alter your monthly repayments. This is why it’s crucial to compare lenders using more than just the advertised interest rate - if you don’t, you could be locked into an agreement that costs your business thousands of dollars in fees over the loan term.
Low interest rates don't always mean the lowest repayment amount
|Loan Type||Loan Amount||Loan Term||Interest Rate||Fees (monthly)||Monthly Repayment|
|Commercial Hire Purchase||$50,000||5 years||4.5%||$0||$932.15|
|Chattel Mortgage||$50,000||5 years||5.5%||$0||$955.06|
|Finance Lease||$50,000||5 years||4.5%||$30||$962.15|
|Operating Lease||$50,000||5 years||5.5%||$10||$966.06|
|Unsecured Business Loan||$50,000||5 years||10.00%||$0||$1,062.35|
You can see in the table above that monthly fees can impact the amount you will repay monthly. While it may not seem like a great difference in monthly repayments, the table below will show the total loan amount you would repay for each of the above finance options over the full term.
Want to see how much you’ll pay using equipment finance? Use our free equipment finance calculator to view a personalised repayment assessment.
How monthly fees can make a big difference to your total loan amount
|Loan Type||Loan Amount||Loan Term||Interest Rate||Fees (monthly)||Total Loan Repayment|
|Commercial Hire Purchase||$50,000||5 years||4.5%||$0||$55,929.00|
|Chattel Mortgage||$50,000||5 years||5.5%||$0||$57,303.60|
|Finance Lease||$50,000||5 years||4.5%||$30||$57,729.00|
|Operating Lease||$50,000||5 years||5.5%||$10||$57,963.60|
|Unsecured Business Loan||$50,000||5 years||10.00%||$0||$63,741.00|
Equipment Finance Interest Rates Summary
The best equipment rates in Australia start from 4.00% and are fixed for the term of the loan. To get the best - i.e. lowest - rate on equipment finance, a borrower will want to present as little risk to the lender as possible. As you’ve seen above, if paying the lowest total loan amount is your goal, then you’ll also need to consider monthly fees alongside interest rates.
In summary, the best equipment finance interest rates in Australia:
- Are offered to stable, secure businesses
- Are offered to borrowers with a clean credit history
- Are offered to businesses with a high monthly or annual revenue
- Are applied to secured loans
- Do not include high monthly fees
- Are available from a variety of lenders