A quick guide to equipment finance
Equipment finance is a beneficial tool that enables businesses to acquire necessary machinery, technology or vehicles without impacting cash flow.
It's an agreement between a lender and a business, where the lender purchases the equipment and leases it back to the business for an agreed period, eventually leading to ownership.
Here's an overview of what an equipment finance typically offers:
- Loan amounts from $5,000 - $5,000,000
- Flexible loan terms: 1 to 7 years
- repayment frequency: weekly, fortnightly, or monthly
- Fixed interest rates from 7.44%
- Interest rates customized to your financial profile
Want to skip ahead?
This guide is broken down into the following sections. Click a link if you want to skip ahead.
- 1.What can I use a equipment finance loan for?
- 2.How much can I borrow for a equipment finance loan?
- 3.equipment finance Loan Repayment Calculator
- 4.Am I eligible for a equipment finance loan?
- 5.How to apply for a equipment finance loan?
- 6.How to get the best equipment finance loan for you?
- 7.Frequently Asked Questions
What can I use equipment finance for?
Equipment finance can be used to acquire a wide array of assets - from computers, machinery, to vehicles. This form of financing is valuable for businesses that want to stay technologically updated, expand their operational capabilities, or replace worn-out assets without taking a significant hit on their cash reserves.
Business Expansion
A secured business loan can provide the necessary funds to expand your business operations, open new locations, or enter new markets.
Inventory Management
Secured loans can help businesses manage their inventory by providing funds to purchase and stock up on inventory for increased sales.
Business Acquisition
Secured loans can facilitate the acquisition of another business, allowing for growth and expansion through strategic mergers or acquisitions.
Real Estate Purchase
Secured business loans can be utilised for purchasing commercial properties or real estate for business purposes, such as office spaces or retail locations.
Renovation or Expansion
Businesses looking to renovate or expand their existing facilities can use secured loans to fund construction, remodeling, or expansion projects.
Equipment Purchase
Secured business loans are commonly used to finance the purchase of machinery, vehicles, or other equipment necessary for business operations.
Working Capital
Secured business loans can be used to cover day-to-day operational expenses, manage cash flow gaps, and support ongoing business activities.
Debt Consolidation
Businesses can use secured loans to consolidate existing debts into a single loan, simplifying repayment and potentially reducing interest rates.
Marketing and Advertising
Secured loans can help businesses invest in marketing and advertising campaigns to enhance brand awareness and reach a larger customer base.
Technology Upgrades
Secured business loans can be used to invest in technology upgrades, including software, hardware, and infrastructure, to improve business efficiency and competitiveness.
How much can I borrow for equipment finance?
When it comes to equipment finance in Australia, the amount you can borrow will depend on various factors, including the value of the equipment you intend to purchase, your business's financial health, and the specific lender's policies. Equipment finance allows businesses to acquire necessary machinery, vehicles, or other equipment without tying up a significant amount of capital upfront.
The loan amount for equipment finance can vary widely, ranging from a few thousand dollars to several million dollars. Financial institutions in Australia typically offer equipment finance loans starting from around $5,000, but the upper limit can vary depending on the value of the equipment and your business's needs.
Lenders consider the value and useful life of the equipment when determining the loan amount. Typically, lenders will offer a loan amount based on a percentage of the equipment's purchase price or appraised value. The loan-to-value ratio (LVR) commonly ranges from 80% to 100%, meaning you may be eligible to borrow up to the full value of the equipment.
It's important to note that lenders will assess your business's financial stability, creditworthiness, and ability to repay the loan when determining the loan amount. Providing detailed information about the equipment you plan to purchase, including quotes or invoices, can help strengthen your loan application and potentially increase your borrowing capacity.
Business Loan Repayment Calculator
To estimate your monthly repayments and the total cost of the loan, input the loan amount, loan term and interest rate into the calculator below. This helps you plan your budget and choose the most suitable loan terms.
Total amount to repay
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Your repayments
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Your repayment chart will appear here after calculation.
Am I eligible for a equipment finance loan?
Understanding your eligibility can help you make informed financial decisions.
Lenders consider several factors when assessing your eligibility, including your credit score, income, debt-to-income ratio, age, residency, and required documentation.
While meeting the eligibility criteria doesn't guarantee loan approval, having a good credit score, stable income, and a positive financial profile significantly improve your chances.
You are eligible to apply for a equipment finance loan if you:
- ✔Are over the age of 18
- ✔Are an Australian citizen or permanent resident
- ✔Have a regular source of income sufficient to meet the repayments
How to Apply for a equipment finance Loan
Applying for a equipment finance loan is straightforward and takes only a few minutes. Simply fill out our online form with some basic details, and you'll be on your way.
Once we receive your information, a representative will reach out to help you explore loan options from over 50 trusted Australian lenders.
If you're eligible for a equipment finance loan and are satisfied with the initial quote, here's what you’ll need to prepare:
- ✔ Passport or driver’s licence
- ✔ Proof of income and expenses (e.g., payslips, bank statements)
- ✔ Details of any current debts or loans
How to Find the Best equipment finance Loan for Your Needs
Choosing the right equipment finance loan involves understanding key factors like interest rates, fees, and repayment terms. Each aspect can impact the total amount you'll pay, so it's vital to make an informed decision.
Interest Rate
Lower interest rates reduce the total cost of the loan. Take time to compare rates from various lenders to secure the best deal.
Comparison Rate
Unlike the interest rate alone, this includes fees and charges to give you a clearer understanding of overall costs.
Early Payout
Find out if your loan allows early repayments without penalties, as this can save you significant interest costs.
Fees
Pay attention to application, ongoing, and early repayment fees. Opt for a loan with competitive and transparent fee structures.
Loan Term
Shorter terms mean higher monthly payments but less interest overall, while longer terms reduce payments but increase total costs.
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