Which Asset Finance Option Is Right for Your Business?

August 2025

Which Asset Finance Option Is Right for Your Business?

When it comes to acquiring vehicles, equipment, or technology for your business, there’s no one-size-fits-all finance solution. The right structure can preserve your cash flow, maximise tax benefits, and give you the flexibility to upgrade when you need to. The wrong choice can tie up capital or leave you with a structure that doesn’t fit your needs.

What Is Asset Finance?

Asset finance is a type of lending where the asset itself is used as security for the loan. It allows you to purchase or lease an asset now and pay for it over time, typically through fixed monthly or quarterly repayments. At the end of the term, you may own the asset outright, return it, or upgrade — depending on the finance type.

Preserves working capital for other expenses
May offer tax advantages depending on structure
Often faster approvals than unsecured loans
Flexible terms from 1 to 7 years

The Main Asset Finance Options

Here are the five most common product types used in Australia, along with how they work and when they’re best suited.

Product Type	Who Owns the Asset	Typical Term	GST & Tax Treatment	End of Term Outcome
Chattel Mortgage	You (from day one)	2–7 years	Claim GST upfront, depreciate asset, claim interest	Own asset outright
Hire Purchase	Lender until final payment	2–7 years	Claim GST upfront, depreciate asset, claim interest	Own asset outright
Finance Lease	Lender	2–5 years	GST claimable on lease payments, 100% deductible	Pay residual or return asset
Operating Lease	Lender	1–5 years	GST claimable on lease payments, 100% deductible	Return or upgrade
Novated Lease	Employee after term	1–5 years	Pre-tax benefit, GST claimable by employer	Pay residual or return

Typical Rate Ranges

Rates depend on the asset, your financials, and the lender type. Here’s what’s common in Australia in 2025:

Asset Type	Bank / Prime Lender	Non-Bank Lender	Private / Specialist
New Vehicles	6.5% – 8.5%	8% – 10%	10% – 14%
Used Vehicles	7.5% – 9.5%	9% – 12%	12% – 16%
Heavy Equipment	7% – 9%	9% – 11%	12% – 15%

Example: $50,000 Asset Over 5 Years at 8%

Product Type	Initial Outlay	Monthly Payment	GST Claim	End of Term
Chattel Mortgage	$0	~$1,013	$5,000 upfront	Own asset
Finance Lease	$0	~$870	GST monthly	Pay $10k residual or return

Final Thought

The right asset finance option depends on your cash flow, tax position, and how long you plan to keep the asset. SME Money works with over 30 lenders to find the structure that fits your goals — and negotiate the best possible rate.

Need Help Choosing the Right Option?

Speak with SME Money to compare finance types, rates, and repayment options — all tailored to your business needs.

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Disclaimer: The information above is general in nature and does not constitute financial or legal advice. Please consult your accountant or financial advisor before making finance decisions.