Asset finance: how lenders fund what you buy by securing it against the asset

Asset finance is lending secured by the asset you’re buying. Instead of pledging your home or relying only on your trading record, the lender takes security over the vehicle, truck, machine or equipment itself, and can sell it to recover what’s owed if the loan goes bad. That single idea explains almost everything about how asset finance is priced, approved and structured.

What counts as an “asset” in asset finance?

Almost anything physical, identifiable and saleable that your business uses to earn income. In practice, lenders sort assets into rough tiers:

Asset tier	Examples	How lenders tend to treat it
Primary (mobile, mainstream)	Cars, utes, vans, trucks, trailers, popular earthmoving brands	Most comfortable; strongest terms and longest tenors
Secondary (fixed or semi-specialised)	Workshop machinery, commercial kitchen gear, medical equipment	Assessed more closely; may need a deposit
Specialised or soft	Bespoke production lines, signage, fit-out, software	Often needs extra security or a different product

The tier matters because it answers the lender’s first question: if we had to take this back, what would we get for it? A two-year-old van has a deep second-hand market. A custom conveyor built for one factory floor may be worth little to anyone else.

How is asset finance different from a business loan?

A general business loan is assessed mainly on your business and, if secured, on property. Asset finance shifts much of the weight onto the asset. That has some clear consequences.

• The money has a purpose. Funds go straight to the supplier for a named item; you can’t redirect them to wages or a tax bill.
• The asset decides a lot. Age at the end of the term, condition and brand all shape what’s possible.
• Your property stays out of it. For primary assets, there’s usually no need to offer your home.
• It shows up on the PPSR. The lender registers its interest. That same register is what a careful buyer checks before purchasing high-value goods privately, so the system works both ways.

If you need money for things without resale value, such as stock, wages or an ATO payment, look at working capital loans or unsecured business loans instead.

Which structure should you choose?

Asset finance comes in several legal forms. The two you’ll hear about most are the chattel mortgage, where you own the asset from the start, and the finance lease, where the financier owns it until the residual is paid. Hire purchase and rentals sit alongside them. The business.gov.au comparison of leasing and buying is a useful neutral starting point: ownership lets you modify and sell, while leasing can ease upgrades and smooth cash flow but may cost more overall.

The right answer depends on how long you’ll keep the asset, how you account for GST and tax, and whether you want it on your balance sheet. That’s a conversation for your accountant as much as your lender.

Want a straight answer on which form suits your purchase? Start a quick enquiry and a real person will walk through it with you.

What do lenders want to see?

Expect questions about:

• The asset: quote or invoice, make, model, year, kilometres or hours, and who’s selling it.
• The business: ABN and GST registration dates, how long you’ve traded, recent BAS and bank statements.
• The people: director credit files and your experience in the industry.
• The fit: whether repayments sit comfortably within your existing commitments.

Well-established businesses buying primary assets from dealers sometimes qualify on minimal paperwork. Newer businesses or unusual assets need more.

What does it cost, and what drives the price?

Every deal is priced on its own facts, so the useful thing to know is what moves the price:

• Asset tier and age. Newer, mainstream assets attract better pricing than old or specialised ones.
• Your trading strength and credit. A long, clean record helps.
• Deposit and balloon. A deposit reduces the lender’s risk; a balloon lowers repayments but leaves a lump sum at the end.
• Fees. Establishment and documentation fees up front, sometimes monthly account fees, and a payout cost if you finish early.

For cars, the ATO also caps how much of the cost you can depreciate. The car limit for 2025–26 was $69,674, and the ATO updates it each financial year. That’s a tax matter rather than a lending one, but it does affect the true after-tax cost of a premium vehicle.

Illustrative example

Illustrative example: A plumbing business running four vans wants to add two more and a trailer-mounted jetter, about $160k in total. The vans are primary assets bought from a dealer, so they’re financed under a chattel mortgage with no property security. The jetter is more specialised; the lender asks for a small deposit on that item only. Because the business expects to keep buying vans, it sets up a fleet facility so future purchases can be drawn without a fresh application each time.

Can a newer business use asset finance?

Yes, and for many young businesses it’s the first form of credit they can get. Because the asset carries much of the risk, a lender can look past a short trading history if other signals are good: solid industry experience before going out on your own, a clean credit file, a sensible deposit, or a contract that shows where repayments will come from. A primary asset bought from a dealer is the easiest starting point. A second-hand specialised machine bought privately in the first few months of trading is the hardest.

If the asset on its own isn’t enough, there are two common fixes. One is a bigger deposit, which shrinks the amount at risk. The other is adding security, such as equity in property, which can turn a borderline application into a straightforward one. New business loans covers the wider options for businesses still building a track record.

When asset finance isn’t the answer

• The asset is mostly installation or labour. That’s fit-out finance territory.
• You need cash, not a new asset. If you already own equipment outright, sale and leaseback or a secured business loan may be the better route.
• The asset is too specialised to stand on its own. Property security can fill the gap, with property-secured business loans from $20k to $5m.

The secured or unsecured check is a fast way to see which camp your purchase falls into, and the industry finder shows what businesses like yours typically finance.

See what your next asset could look like

Whether it’s one ute or a whole yard of gear, start with a short enquiry. It takes roughly a minute, and asking doesn’t trigger a credit check. Your information goes to a person, not a marketplace that sells it to whoever pays; that person looks at the asset, your business and your goals, then rings you to talk it through. Fill in the form carefully and honestly, including the asset you’re after and whether you own property, so we can line up the right structure on the first attempt.

Start your asset finance enquiry →