What Is Asset Finance: A Complete Guide

Asset finance is a way to purchase vehicles, machinery, or equipment without tying up working capital. It offers structured repayments, predictable budgeting, and the ability to upgrade assets regularly. Asset finance is widely used by both individuals and businesses in Australia.

How Asset Finance Works

Asset finance is a loan secured against the asset being purchased. Repayments are made over a set term, while the lender holds the asset as collateral. This structure reduces risk and often allows access to better rates compared to unsecured finance.

Common Types of Asset Finance

• Vehicle Finance: Cars, vans, trucks, and other work vehicles
• Equipment Finance: Machinery, tools, office equipment, and specialised assets
• Chattel Mortgage: Business loans offering potential tax benefits
• Hire Purchase: Ownership transfers after the final repayment
• Finance Lease: Businesses lease assets for fixed periods with end-of-term options

Benefits of Asset Finance

• Preserves cash flow and working capital
• Predictable monthly repayments
• Possible tax advantages for businesses
• Faster approvals than traditional business loans
• Enables regular upgrades of essential assets

Personal vs Commercial Asset Finance

Personal asset finance considers individual income, credit history, and borrowing capacity. Commercial asset finance looks at business turnover, trading history, and the asset’s role in operations. Businesses often access longer loan terms, flexible repayment structures, and higher borrowing limits.

How Lenders Assess Applications

• Income or business turnover
• Bank statements and credit history
• Asset type, age, and condition
• Deposit amount
• Director or personal guarantees for commercial borrowers

FAQs

Can I finance a used vehicle or equipment?
Yes, though lenders carefully assess age, condition, and resale value.

Do I always need a deposit?
Not necessarily; some lenders provide 100% finance depending on asset type and borrower profile.

Conclusion

Asset finance is a flexible and effective way to secure the vehicles and equipment you need. Choosing the right loan structure and lender, and understanding application requirements, ensures smooth approvals and predictable repayments. Apply for asset finance here.