On this page
On a small screen, scroll the table sideways to see every column.
| Feature | What to establish |
|---|---|
| Ownership | Who buys and owns the asset from settlement. |
| Security | The financed asset and any additional security or guarantee. |
| Deposit and fees | How much cash is needed before the asset can be used. |
| Balloon | The amount due at the end and how you intend to pay it. |
| Early payout | How interest, charges and security release are calculated. |
| Tax and GST | Treatment for this business, asset and agreement. |
How the arrangement works
The lender finances the purchase and takes security over the asset. The business repays the loan under the agreed schedule. If it defaults, the lender may enforce its security under the contract and applicable law.
Hire purchase differs because ownership transfers in accordance with that agreement after the required payments and conditions are met. A lease has its own ownership and end-of-term terms. The labels are not interchangeable.
Follow the purchase from quote to usable asset
Start with a supplier quote identifying the asset, buyer and full price. Separate delivery, installation, accessories and other costs so the lender can confirm what it will fund. If finance only covers the main purchase, the business still needs cash to make the asset operational.
Ask which documents and conditions must be satisfied before the supplier is paid. For a used asset or private sale, find out what ownership, identification, valuation or inspection evidence is required. Do not assume the application approval covers a different asset substituted later.
The repayment case should reflect when the asset begins earning money. A machine delivered now but commissioned in six weeks may generate deductions before additional production starts. Allow for training, downtime and the working capital needed to use the increased capacity.
Under a chattel mortgage, owning the asset does not remove the finance obligations attached to it. Check permission requirements for sale, relocation, modification or changes in use. Ask how security will be released after payout and retain the evidence with the purchase records.
A balloon reduces instalments, not the purchase price
Deferring part of the principal leaves a larger balance during the term than an otherwise equivalent fully amortising loan. That can increase interest and creates a final lump sum. Westpac explains the balloon trade-off in its equipment guidance (checked 5 October 2026).
For illustration, a $15,000 balloon on a vehicle is still due even if the vehicle is worth only $10,000 at the end. Selling it, using savings and seeking a refinance are different repayment plans; only the first two can be assessed without assuming a future credit approval.
Match the balloon before comparing repayments
Two offers can finance the same vehicle at the same rate and still produce very different monthly figures because one defers more of the principal. Use the same asset price, deposit, term, repayment frequency and balloon when requesting quotes.
Add establishment, documentation and ongoing charges. Then compare the cash needed at the end as well as during the term. A business planning to keep the asset should have a way to fund the balloon without relying on a sale. A business planning to replace it needs a conservative resale estimate and money for the next purchase.
If an early sale is likely, request the payout calculation and security-release process. The settlement amount may differ from the balance on an illustrative repayment schedule. Ownership does not mean the secured asset can be sold without dealing with the lender's interest.
Choose how much principal to defer deliberately
A balloon can suit a planned replacement cycle if the business accepts the final-payment risk. It can be less suitable where the asset will be kept for years after the loan ends and there is no cash reserve. Compare at least one lower-balloon or fully repaying quote before deciding that the lowest instalment is affordable.
For illustration, putting aside $250 a month for 60 months builds $15,000 before interest on savings or tax. If a proposed $15,000 balloon requires that reserve, include the $250 in the monthly cash budget alongside the quoted repayment. The lower scheduled instalment does not mean that all remaining cash is free to spend.
Keep the reserve assumption separate from resale. Setting aside the full balloon and expecting to sell the asset are two different plans. State which one supports the decision, then test the result if a lower sale value or an unexpected repair reduces available funds.
When another structure deserves a quote
A business that expects to use rapidly changing equipment for a short period may want to compare a lease or rental with clear return terms. A business buying a durable machine for long-term use may place more value on ownership and a known debt-free date. Neither preference settles the cost comparison on its own.
Include maintenance responsibilities and end-of-term conditions, not just the interest rate. The government's equipment guidance sets out the basic buying and leasing trade-offs (checked 5 October 2026). Give the final agreements to your accountant and, where needed, legal adviser before relying on their tax or ownership treatment.
Check business use and tax treatment
Providers set business-use and eligibility conditions. GST credits, deductions and depreciation depend on your circumstances and the relevant rules; do not assume every asset attracts the same treatment or that a whole instalment is deductible.
Settle the purchase and repayment case before counting on a tax benefit. The useful result is equipment the business needs, with payments and a final balance it can manage.
Compare the rate with the final repayment schedule
For context, the RBA reports 7.23% p.a. for new small-business loans in August 2026. This is an average across different loan types, not a quote for this product or a rate every borrower can obtain. See how to compare business loan rates and use your written offer for the repayment calculation. Source checked 10 October 2026.
Asset-finance fees to confirm in the quote
Provider sources checked on 10 October 2026. CommBank’s car and equipment finance page describes a one-off documentation fee, paid upfront or financed, without publishing a universal amount. Its product starts at $20,000 and has no monthly loan fees. Eligibility and the offered rate still require assessment.
Westpac’s live equipment-loan page links a fee schedule dated 23 August 2024. That schedule states a $500 vehicle/equipment establishment fee, with inspection, registration and other charges where applicable. It lists early termination charges separately from variable break costs. Confirm the current quote: a linked older fee schedule is useful evidence of the charge structure, but is not a promise that every 2026 application receives those amounts.