Equipment Finance Interest Rates

Paying lower equipment finance interest rates is all about accessing the right products and lenders – this is how 

Compare Equipment Finance Interest Rates

Equipment Finance Interest Rates - How to pay less for Borrowing

Although they’re an important component in how lenders charge businesses for finance, interest rates are not the only aspect you should reference when you’re comparing different asset finance optionsWhether you lease equipment or use a loan to buy assets, depending on your business structure and how you operate, tax benefits can have a significant impact on the cost of finance.

In this guide, you’ll learn all about equipment finance interest rates – and how you can reduce your borrowing costs. 

Finding the Lowest Equipment Finance Interest Rates via Savvy

For most business owners, comparing every single interest rate and finance option available just isn’t practical. Australia has hundreds of commercial lenders, ranging from big banks to specialist, niche finance providers. During the course of an asset finance loan or lease, even slight changes to structure or rates can have a massive effect on the overall cost of borrowing – and impact cash flow considerably.

At Savvy, we help businesses by partnering with a wider lender panel and offering more choice. 

Why Businesses Choose Savvy for Equipment Finance  

More equipment finance lenders, better interest rates, expert, helpful commercial lending consultants – that’s Savvy

All the available commercial loan options with cheap rates

Lease and loan solutions come with different equipment finance interest rates – here’s what you need to know 

Finance Lease

Finance Leases come with terms between one and five years. Finance lease residuals are fixed and based on the length of the lease, and represented as a percentage of the asset price. When the term ends, you can purchase, refinance, or sell the equipment and start a new lease.   

Chattel Mortgage

Chattel Mortgage finance is a low-cost finance solution that boasts excellent interest rates and a straightforward secured loan structure. Terms run between one and seven years, and the end-of-lease options are identical to a finance lease. The interest portion of repayments is tax-deductible. 


How much do asset finance interest rates really matter? Comparing a chattel mortgage and finance lease

Finance Type: 

Finance Lease 

Chattel Mortgage 





28% ($10,181) 

40% ($16,000) 


5 Years 

7 Years 

Interest rate: 



Monthly fee: 



Monthly payments: 



Total interest: 



Finance cost: 



GST back at BAS: 



Net finance cost: 



The example above is a good illustration of how fees can add up during a loan term. Take a look at the finance lease in the column on the left: 

  • The lease has a lower interest rate but comes with a monthly fee. 
  • The ATO-set residual amount can’t be adjusted – so you’re paying more of the principal down during the agreement, which means you’re paying more interest too.  
  • The available term is also shorter than with a chattel mortgage, so that drives monthly repayments up. 
  • The purchase price is GST-free, because the lender claims that back 


The chattel mortgage in the column on the right has a different structure. Many businesses choose chattel mortgages because it’s simpler to manage cash flow: 

  • At the end of the term, there isn’t a great deal of difference in the cost of finance, even though the chattel mortgage interest rate is slightly higher. 
  • The residual is adjustable and the maximum term available is seven years, so it’s easy to reduce repayments.  
  • You can adjust the residual to reduce your monthly repayments, improving your cash flow or even aligning the regular cost of the finance with the revenue the asset generates.  
  • You claim all of the GST on the purchase price when you file your next BAS. 

Equipment Finance Interest Rates for Operating Lease

An operating Lease works a bit like a long-term rental agreement. Terms 

run over anything from one to five years. Operating leases are a fully maintained finance solution, meaning you pass over the administration of everything from fuel to servicing, insurance and maintenance to the lender. The costs get bundled with your lease payments. 

  • The lender bears ownership and residual risks, which increases the interest rate 
  • All operating lease payments are tax-deductible 
  • The cost of the lease is based on the ex-GST price of the equipment 

Why should my business use a broker? How does Savvy work?

Here at Savvy, we’re specialist finance brokers, so at a company level, we develop long-term relationships with some of the best lenders in the country. That creates a few different positives for businesses. We get access to highly competitive interest rates, and quite often, we can offer solutions with more flexibility in their structure than off-the-shelf financial products.  

 At the people level, we have teams of experienced finance consultants who think commercial asset finance five days a week, and that presents one or two more benefits for our customers. Savvy’s consultants utilise an expert knowledge of our extensive, diverse lender panel’s products and services to identify the best options for your business. They also leverage those long-term lender relationships to help you navigate requirements and negotiate processes, allowing your applications to run faster and more smoothly.  

  • Compare sector-specific products and lenders, then access more competitive interest rates and flexible loan or lease structures 
  • Tap our expertise, and utilise consultants with deep understanding and experience of the lender marketplace, their products, and the qualification requirements. When the interest rate isn’t the most important component of a finance structure, we’ll let you know 
  • Quickly gain insights as to the tax and cost benefits of different products and finance structures to enable faster, better-informed decisions   

How does financing second-hand equipment affect interest rates?

Across industry, it’s relatively common to finance the purchase of second-hand trucks, machines, trailers, and manufacturing equipment. You can also borrow to buy from private vendors. However, interest rates for both options will be a bit higher than when you purchase brand-new.  

That being said, used equipment does tend to entail lower borrowing amounts. Vehicles are probably only second to property when it comes to lower lender risks – and that reduces the impact of interest rises. Equipment that becomes obsolete more quickly carries more lender risk and higher interest rates – computers and communications devices, for instance. For retail borrowers, a shop fit-out or refurbishment poses an even greater risk to loan providers because it’s more difficult to recoup losses in the event of a default. 

Age of Asset 










Up to 2 years 





Up to 5 years 





Over 5 years 





Are equipment finance interest rates for low doc loans higher?

Low doc equipment loans provide the option to supply alternative documentation if your tax returns or financials aren’t up to date when you need finance. Lenders will look to cover the additional risk by upping the interest rate, but you can alleviate some of the extra cost by supplying as much information as possible.  

Different equipment finance lenders will ask for varying amounts of documentation, but you stand a chance of reducing the interest rate if you can produce: 

  • Statements for your business accounts 
  • Letteror appraisals from your accountant or accounts department 
  • Copies of signed orders for future work 
  • Recent business activity statements 

It’s an excellent idea to consult with a broker if you’re in a low doc situation because they’ll be able to target the right lenders and advise about what you can do to improve the interest rate offered. 

What can I buy with equipment finance?

There’s almost no limit to what you can buy with equipment finance. It gets used across all Australian commercial sectors from restaurants to mining and civil engineering. Specialist equipment finance providers offer a multitude of options for a vast array of tools, vehicles, machines, and other assets: 


Transport: Trucks & Prime Movers 

Transport: People Carriers & Buses 

Agriculture: Tractors 

Business: Cars 

Agriculture: Harvesters 

Agriculture: Headers 

Construction: Excavators 

Transport: Trailers & Tankers 

Trades: Utes & Vans 




Trades: Mowers & Chainsaws 

Manufacturing: Lathes & Presses 

Hospitality: Coffee Machines 

Transport: Forklifts 

Construction: Power Tools 

Construction: Graders 

Construction: Cranes 

Hospitality: Ovens & Ventilation 

Trades: Access Equipment 



Infrastructure & IT 

Retail: Shopfitting & Furniture 

Manufacturing: CNC Machines 

Logistics: Warehouse Management 

Business: Computers & AV 

Premises: Security & CCTV 

Agriculture: Silos & Irrigation 

Office: Telecoms Equipment 

Transport: GPS Equipment 

Office: HVAC Equipment 


Equipment Finance Interest FAQs – Your questions answered 

Find out about what influences equipment finance interest rates, and what you can do to reduce borrowing costs 

I’ve found a loan with a low interest rate – shouldn’t I just use that?

When it comes to equipment finance, its important to remember that the interest rate isn’t usually the most critical influence on the overall cost of borrowing. Sometimes, offers with an interest rate that seems appealing at first can begin to look a lot more expensive when you examine them more closely.

Fees during a loan or lease agreement can add up – and different products and lenders have various methods for charging, irrespective of the interest rate. Monthly or annual account fees can get expensive, as can set-up charges. It’s important to compare like for like when it comes to finance, and using a broker is an excellent way to do that.   

I’ve been offered 0% finance at the dealership – is that the best option?

Financing through a dealership can be a minefield in terms of interest rates and the real cost of finance. While machines, equipment, and vehicles might come with the promise of ‘0% or 1% finance,’ in reality that’s unrealistic and such deals are often propped up by charging more for the asset in the first place. 

Does a low credit rating influence equipment finance interest rates?

In short, yes. All lending costs get based on risk, and that’s reflected in the interest rate you’ll pay. If you’ve had issues in the past, like defaults or late payments, bad credit equipment finance is going to cost a little more. It’s best to relate your specific circumstances to one of Savvy’s expert brokers – we’ll work hard to canvas relevant lenders for quotes. 

What equipment finance interest rate will I pay?

It’s not just the type and age of asset that drive interest rates up or down. A number of things influence the equipment finance interest rates different companies pay. Your credit rating and business finances are two primary factors. 

  • Your credit history will influence both lender decisions and how much they charge 
  • The current financial health of your business and how much existing borrowing you have also affects the interest rate for equipment finance 
  • How long you’ve been trading 
  • Your business turnover 
  • Whether you’re asset-backed (have equity in property) 
What’s a comparison rate?

A comparison rate is basically a representation of the cost of a finance product once additional fees and charges have been factored in. It takes monthly or annual account fees, plus set-up charges, the interest rate, and any other ‘hidden extras’ into account – then displays that as an adjusted interest rate.

How does secured equipment finance work?

Secured loans serve to keep interest rates lower because the lender’s risk is always proportional to what they charge. Riskier borrowers and loan structures result in higher rates – no matter what field of finance. Secured asset loans like chattel mortgages offer some distinct tax advantages, but they also come with some attractive interest rates too. That’s because, although you own the asset from the start, the lender maintains a mortgage on it until you’ve repaid the finance. 

Brands you can trust

We are accredited with the most reputable lenders and insurers in Australia giving you a fair choice to compare