Asset Finance - Q & A

Asset finance is a lending arrangement where a business acquires equipment, vehicles, or machinery using finance secured against the asset itself, rather than drawing on cash reserves or property security. The business uses the asset immediately and repays the lender over an agreed term, typically 24 to 60 months.

 

Asset finance preserves working capital for operational needs while allowing a business to grow its productive capacity. It covers new and used assets across virtually every industry category, including vehicles, plant, machinery, technology, medical equipment, and heavy transport.

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Why asset finance makes commercial sense

Paying cash for an asset ties up capital that could be deployed elsewhere in the business. If that capital is earning a return, funding stock, servicing customers, paying suppliers, using finance to acquire the asset often delivers a better overall outcome, even after accounting for interest costs.

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Asset finance also provides tax efficiency. Depending on the structure, repayments, depreciation, and in some cases the full asset cost may be deductible. Your accountant should advise on which structure best suits your situation and Pfitz works alongside accountants regularly to structure facilities accordingly.

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The key principle is simple: the asset should generate more value to the business than the cost of the finance used to acquire it.

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The main asset finance structures

Hire purchase

The lender purchases the asset and the business makes regular repayments over the agreed term. At the end of the term, ownership transfers to the business. The business claims depreciation as a tax deduction. Suits businesses that want to own the asset outright.

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Finance lease

The lender owns the asset throughout the lease term. The business makes lease payments and uses the asset. At the end of the term, the business can purchase the asset at residual value, extend the lease, or return the asset. Lease payments are typically fully tax deductible. Suits businesses that want flexibility or prefer to upgrade regularly.

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Operating lease

Similar to a finance lease but the residual risk stays with the lender. The business returns the asset at the end of the term. No purchase option. Often used for technology assets or vehicles with high depreciation rates.

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Chattel mortgage

The business takes ownership of the asset immediately, and the lender holds a mortgage over it as security. The business claims the full GST upfront and may be able to claim the full asset cost in year one under instant asset write-off provisions. Suits GST-registered businesses.

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What assets can be financed?

Asset finance covers a wide range of business assets, including: commercial vehicles and trucks, cars and utes for business use, manufacturing plant and machinery, construction and earthmoving equipment, medical and dental equipment, technology and IT equipment, hospitality and food service equipment, agricultural and farming machinery, and trailers and logistics equipment.

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Both new and used assets can be financed, including assets with higher age and usage that don't meet standard bank criteria. Non-bank lenders often have more flexibility on asset age, type, and condition.

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Matching the lender to the asset

Not all lenders finance all asset types. Some lenders have strong appetites for commercial vehicles but limited appetite for specialised plant. Others are comfortable with older or used assets that mainstream banks won't touch.

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With 30 years in commercial finance and relationships across the full lender panel from major banks to specialist non-bank lenders.  Pfitz matches the asset, the business's financial position, and the lender's appetite before submitting an application. This matters because a declined application affects your credit file.

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FAQ — Asset Finance

What is the difference between a finance lease and a hire purchase?

With hire purchase, ownership transfers to your business at the end of the term. With a finance lease, the lender retains ownership throughout and you have options at the end of the term, buy, extend, or return. The tax treatment differs between structures, so the right choice depends on your accounting method and tax position.

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Can I finance used equipment?

Yes. Many lenders will finance used assets, though criteria vary by asset type, age, and condition. Non-bank lenders tend to have greater flexibility with older assets than major banks. Pfitz accesses a wide panel and will identify the right lender for the specific asset.

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Do I need to provide a deposit?

Not always. Some lenders offer 100% finance on certain asset types. Others require a deposit, particularly for higher-value or specialised assets. This varies by lender and the business's financial profile.

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How long does approval take?

For straightforward asset finance, vehicles, standard plant and equipment,  approval can be achieved in 24 to 48 hours with the right documentation. More complex or higher-value assets take longer.

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What documentation is required?

Typically: an asset quote or invoice, two years of financial statements or tax returns (BAS statements for some non-bank lenders), and directors identification. Some lenders offer low-doc or no-doc facilities for assets under a certain value.

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Can I finance multiple assets on one facility?

Yes. An asset finance line or fleet facility allows multiple assets to be financed under a single agreement with an overall limit, which simplifies administration and provides flexibility to add assets over time.

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Is asset finance available for start-ups?

Some lenders will consider businesses with limited trading history, particularly for lower-value assets where the lender's risk is primarily in the asset. Security over the asset and a personal guarantee will be required. Pfitz can identify which lenders are open to early-stage businesses.