The structures, plainly
| Structure | Who owns it | How it usually works |
|---|---|---|
| Chattel mortgage | You own it from day one | The lender takes security over the asset; you borrow the purchase price and repay over the term, often with a balloon at the end |
| Finance lease | The lender owns it during the term | You pay to use it, with an agreed residual value at the end that decides whether you buy it, return it or refinance it |
| Operating lease or rental | The lender owns it, and keeps the residual risk | You rent for a period and hand it back, suited to assets that date quickly |
| Rent to own | The lender owns it until the end | Rental payments with an option to take ownership for a nominal amount at the end |
What lenders look at
- The asset. What it is, how old, how specialised, and what it would sell for if it had to be sold. Common, liquid assets get the best terms.
- The term against the asset's life. Funding usually runs to the useful life of the equipment, so a long term on a fast ageing asset is a problem for both sides.
- The business. Time trading, cash flow and existing commitments. Low documentation options exist for established businesses buying standard assets, often up to a limit.
- Deposit and balloon. Money in reduces the risk; a balloon reduces the monthly payment and leaves a lump sum owing at the end, which needs its own plan.
Where it fits in a larger deal
Equipment finance is often the quiet piece that makes a bigger transaction work. In a business purchase, funding the plant separately frees up other borrowing for the goodwill. In a development or a fitout, financing the assets rather than buying them outright keeps cash in the project. It is worth structuring deliberately rather than by default.
What happens if you repay early, whether the facility is secured only against the asset or also by a general security agreement over the business, and who is on the hook personally. Those three decide how flexible the facility is later.
Most private lending is for a business or investment purpose, which sits outside the National Credit Code. That is part of why it moves fast. It also means the consumer protections attached to a regulated home loan do not apply: the loan is short, the cost is higher, default interest can be steep, and the security can be enforced quickly. Read the terms, take legal advice, and be sure of your exit before you sign.
Common questions
Can I finance used equipment?
Usually yes, with the age of the asset at the end of the term being the limit most lenders apply. Specialised or imported equipment is fundable too, often with a deposit.
Do I need to put up property?
Generally no. The asset is the security, which is the main attraction. Larger facilities, or a business with a short history, may need guarantees or additional security.
Is a chattel mortgage better than a lease?
They suit different situations, and the difference is mainly ownership, accounting and tax treatment. That makes it a question for your accountant as much as your broker.
What is a balloon payment?
A lump sum left owing at the end of the term, which lowers the monthly payments. It has to be paid, refinanced or covered by selling the asset, so plan for it when you take the facility rather than in the final month.
Sources
- ASIC: FAQs, does the credit legislation apply?, checked 26 October 2026
- National Credit Code, section 13 (business purpose declaration), National Consumer Credit Protection Act 2009 Schedule 1, checked 26 October 2026
- Reserve Bank of Australia, Financial Stability Review, October 2026: resilience of the Australian financial system (private credit), checked 26 October 2026
General information only, not credit advice. It doesn’t take your objectives, financial situation or needs into account. Rules and figures change; check them, or talk to Joshua, before you rely on them.