Equipment finance is one of the most effective ways for Australian businesses to acquire the necessary machinery and tools without tying up capital. Brokers are uniquely positioned to help their clients understand equipment finance rates, how these loans work and how to get the best deal from partner lenders.
This post will discuss what influences equipment finance rates, what tax considerations are involved, and how brokers can compare offerings across lenders to deliver better results.
What Is Equipment Finance And How Does It Work?
Before comparing rates, it’s helpful to understand equipment finance.
Common Types of Equipment Finance
A few of the more popular types of equipment financing typically include:
- Chattel Mortgage: The business owns the equipment, and the lender uses it as security.
- Finance Lease: The lender owns the equipment, and the business leases it for a fixed term.
- Operating Lease: In these often short-term arrangements, the business returns the equipment at the end.
- Hire Purchase: The business hires and owns the equipment after the final payment.
Each has different implications for ownership, balance sheet impact, and tax treatment. It may help to review your clients’ financial capabilities before suggesting a type of equipment finance.
Who Uses Equipment Finance?
Industries that rely heavily on expensive machinery, such as construction, transport, medical, agriculture, and mining, may typically find equipment finance more useful.
Brokers can help businesses in these sectors find tailored, cash flow-friendly solutions.
Key Factors That Influence Equipment Finance Rates
Equipment finance rates aren’t one-size-fits-all. A range of factors can impact the rate offered, from the type of asset being financed to your client’s financial standing.
This section explains what lenders typically consider when pricing a loan and how brokers can potentially help their clients improve their chances of securing more favourable equipment finance rates.
Type And Age Of Equipment
Lenders assess risk based on the asset. New equipment typically attracts lower rates because it’s more reliable and has higher resale value.
In contrast, older or second-hand machinery often comes with a premium due to maintenance risks.
Loan Amount And Term
The size and length of the loan also matter. Larger amounts may offer more room for negotiation, while shorter terms often mean overall lower payments.
However, brokers may want to prioritise matching any proposed loan terms with their client’s expected asset lifespan and cash flow.
Credit Score And Financial Health Of Borrower
A solid credit score, healthy balance sheet, and clean tax records (including on-time BAS and ATO lodgements) can help unlock lower rates.
Brokers can assist their clients in preparing all required financials before applying.
Tax And GST Implications Of Equipment Finance
Tax treatment is a big part of choosing the proper financial structure. Understanding tax rules can help brokers guide their clients more effectively, whether claiming GST credits or leveraging temporary asset write-offs.
Under ATO guidelines, there are different finance types that can affect GST, depreciation, and record-keeping requirements.
How Brokers Can Compare Rates from Different Lenders
With many lenders offering equipment finance in Australia, brokers are best positioned to explore competitive deals.
But the initial rate isn’t everything, fees, flexibility, and approval time also matter. This section will cover how brokers can compare offerings and prepare clients for smooth approvals.
Working With Specialist Lenders Vs. Banks
Traditional banks may offer competitive rates, but typically have stricter lending criteria and slower approval times. Specialist non-bank lenders may have more flexibility, especially for niche industries or used equipment.
These lenders can potentially offer faster processing, less paperwork, and a better understanding of industry-specific needs.
Brokers can assess each client’s profile to decide whether a mainstream bank or a more agile non-bank lender is better.
Using Rate Comparison Tools
Brokers can use lender platforms or loan software to model repayments based on rate and term.
Note that comparisons between rates may be misleading if they exclude fees, so brokers should explain the actual cost to their clients.
The Importance Of Documentation
Helping clients prepare a strong application, including up-to-date tax returns, bank statements, asset quotes, and business financials, can speed up approvals and unlock better offers.
A well-documented and supported application may provide benefits like the following:
- Reduces back-and-forth with lenders
- Increase approval likelihood
- Helps secure more competitive equipment finance rates
Rate Trends And Market Insights For FY26
Understanding current trends and knowing what’s ahead can help brokers position their clients strategically.
Here’s a look at how the broader economy affects equipment finance rates and what to watch for in FY26.
RBA Cash Rate Impact
The Reserve Bank’s decisions on the cash rate can directly influence equipment loan pricing.
Whenever the RBA raises the cash rate, this will typically affect all other rates. Conversely, rate cuts may lead to more favourable loan conditions.
It may be beneficial for brokers to regularly monitor the RBA’s monetary policy updates and explain these changes in plain terms to clients, especially those with variable-rate finance.
FY26 Forecast
As of mid-2025, inflation is easing, and the cash rate has remained steady as per the latest RBA announcement.
However, global supply chain issues and high demand for capital equipment could keep pressure on rates.
Brokers can stay alert to RBA commentary and lender updates to guide clients effectively and proactively address refinancing or early repayment opportunities.
Final Tips For Brokers Supporting SME Clients
Before wrapping up, here are a few quick suggestions that may help brokers deliver better outcomes:
- Focus on total loan cost, not just the interest rate.
- Match the finance structure to the client’s cash flow and tax goals.
- Review existing loans periodically for refinance opportunities.
- Stay current with ATO rulings and business incentives that affect asset purchases.
Clients often depend on brokers to make complex decisions simpler. Staying sharp on rates, tax rules, and lender products can help brokers stay indispensable.
Conclusion
Equipment finance can help clients grow without stretching their working capital, but only if they get the right deal.
Brokers have the tools and knowledge to guide them through the maze of rate options, loan structures, and tax rules.
By staying informed and comparing lenders strategically, you can help SMEs secure cost-effective finance that supports long-term success.
