Most Australian businesses run on assets they could not comfortably pay for in a single lump sum. Trucks, machinery, tools, fit-outs, technology. Asset finance is how you get those assets working for you now and pay for them over time, without draining the cash your business needs to operate. This guide explains what it is, how it works, the main types, and how a broker fits in.
What is asset finance?
Asset finance is a way of funding a physical asset for your business, where you spread the cost over an agreed term rather than paying for it all upfront. In most cases the asset you are buying also acts as the security for the finance, which is why it is often called asset backed or asset based finance.
The idea is simple. Instead of tying up your working capital in one purchase, you keep that cash in the business and make regular repayments while the asset earns its keep. At the end of the term, depending on how the finance is structured, you either own the asset outright or decide what to do next.
How does asset finance work?
The process is more straightforward than most people expect, and a broker handles the moving parts for you.
The basic steps
- You choose the asset you need, new or used, from a dealer or a private sale.
- A lender pays for the asset, and you repay them over an agreed term with regular instalments.
- The asset usually secures the finance, which tends to mean more competitive terms than an unsecured loan.
- At the end of the term you own the asset, or hand it back, or make a final payment, depending on the structure you chose.
Because the asset itself provides the security, lenders can often say yes more easily and price the finance more sharply than they would for finance with nothing behind it. Your income, your trading history, your credit profile and the asset itself all feed into the decision.
Ready to get started?
Book a chat with an Asset Finance Broker at Treadgold Finance today.
The main types of asset finance
There is no single product called asset finance. It is a family of structures, and the right one depends on how you want to own, use and account for the asset. Speak to your accountant about the tax treatment of each, since that often decides the choice.
Chattel mortgage
You own the asset from day one, and the lender takes a mortgage over it as security until the finance is repaid. Popular with businesses that want ownership on the books straight away. There is more detail in our guide to how a chattel mortgage works.
Finance lease
The lender owns the asset and leases it to you for an agreed term and regular payments. You get full use of it, with options at the end of the lease.
Hire purchase
You hire the asset and pay it off in instalments, then take ownership once the final payment is made.
Operating lease and rental
Closer to a long term rental. You use the asset without the commitment of owning it, which suits assets that date quickly or that you only need for a set period.
What can you finance?
If it is a tangible asset your business uses to make money, there is usually a way to finance it. Common examples include:
- Vehicles, from a single tradie ute to a whole fleet
- Trucks and trailers, prime movers and tippers
- Plant, machinery and equipment, from excavators to workshop gear
- Technology, tools, fit-outs and specialist gear for your trade
Different lenders have different appetites for different assets, ages and industries, which is exactly where comparing a wide panel pays off.
Who is asset finance for?
Asset finance is built for working businesses: companies, sole traders and ABN holders who need equipment to operate and grow. It suits you if you would rather keep cash in the business than sink it into a single purchase, if you want predictable repayments you can budget around, or if a piece of equipment will start paying for itself the moment it arrives.
It is used across nearly every industry, from trades and construction to transport, agriculture, healthcare, hospitality and professional services.
Secured against the asset, and why that helps you
Because the asset usually secures the finance, asset finance sits in the secured category, and that generally works in your favour. Secured finance tends to come with more competitive terms than unsecured finance, because the lender has the asset behind the agreement. For newer, higher value assets in particular, this can make a real difference to what you are offered.
Asset finance or paying cash?
Paying cash feels tidy, but it can quietly cost a business more than it saves. The money you hand over for one asset is money you no longer have for wages, stock, a downturn or the next opportunity. Asset finance lets the asset earn while you pay for it, keeps your cash reserves intact, and turns an unpredictable lump sum into a set of repayments you can plan around. There can also be tax advantages depending on the structure, which is a conversation to have with your accountant.
What is an asset finance broker, and why use one?
An asset finance broker arranges the finance on your behalf. Rather than walking into one bank and taking whatever that single lender offers, a broker compares your situation against a wide panel of lenders and matches you to the one most likely to approve you on the terms that suit.
At Treadgold Finance we work with 40+ lenders, which matters because approval and pricing for asset finance vary enormously between lenders depending on the asset, your industry and your profile. A broker also does the legwork: the paperwork, the lender liaison and the chasing, so you can keep running your business. It is the difference between one opinion and the whole market working for you.
How to get started
The simplest way to see your options is to tell us what you are looking to finance and a little about your business. From there we compare the panel and come back with the finance that fits. Whether it is a single vehicle, a piece of equipment or finance for the whole operation, you can get a quote with no obligation.
Frequently Asked Questions
What is asset finance in simple terms?
It is a way to fund a business asset, like a vehicle or a piece of equipment, and pay for it over time instead of all at once. The asset itself usually acts as security for the finance.
How does asset finance work?
A lender pays for the asset you choose, and you repay them in regular instalments over an agreed term. The asset generally secures the finance, and at the end of the term you either own it, hand it back, or make a final payment, depending on the structure.
What is the difference between the main types?
The common structures are chattel mortgage, finance lease, hire purchase and operating lease. They differ in who owns the asset, when ownership passes to you, and how they are treated for tax. Your accountant can help you choose the right one for your situation.
Is a financed car an asset?
Yes. A vehicle you are financing for your business is still a business asset. The finance is a liability recorded against it, and how it appears on your books depends on the finance structure you use.
Do I need an ABN to get asset finance?
Asset finance is designed for businesses, so most lenders will want an ABN. Options exist for newer businesses and sole traders, and a broker can match you to a lender that suits where your business is at.
Can I get asset finance with bad credit?
It is possible. Some lenders on a broad panel specialise in helping businesses with past credit issues. The asset providing security often helps, and a broker can point your application to the lenders most likely to consider it.
How long does approval take?
It varies by lender and by how quickly documents are provided, but straightforward applications can move fast when the paperwork is ready. A broker helps by getting your application to the right lender the first time.
