The easiest way to finance medical devices

Financing medical equipment lets you spread the cost while you use the device

Asset finance for medical devices splits the purchase price into fixed monthly repayments over a set term, usually two to seven years. You get immediate access to the equipment and pay it off while it generates income for your practice.

This matters in Coffs Harbour where many practices serve a mix of Medicare-funded patients and out-of-pocket specialists, and income can fluctuate seasonally with tourist numbers. Dropping $80,000 on an ultrasound or $150,000 on a dental CBCT scanner in one hit ties up capital you might need for payroll, consumables, or lease payments during quieter months. Spreading that cost preserves your operating buffer.

Consider a GP practice adding bulk-billed skin checks. An dermatoscope with imaging costs around $25,000. Instead of writing a cheque, you finance it over five years at around $500 per month. The equipment generates Medicare rebates from day one, and the repayments come out of that revenue stream rather than your working capital.

Chattel mortgage gives you ownership and tax benefits upfront

A chattel mortgage is a secured loan where you own the equipment from day one and the lender holds a charge over it until the loan is paid off. You claim depreciation and the GST credit immediately, and interest is typically tax deductible.

This structure suits established practices with consistent cashflow. You're not renting the device or waiting until the end of a lease to own it. It's yours, so you claim the depreciation each year and write off the interest against your taxable income. If you're purchasing a $100,000 piece of medical equipment, you might claim $20,000 in depreciation in year one under the instant asset write-off threshold or diminishing value method, depending on current ATO rules and your accountant's advice.

Some chattel mortgages include a balloon payment at the end, which lowers your monthly repayment but leaves a lump sum due when the term finishes. That can work if you expect a capital injection or plan to refinance, but it does mean the loan isn't fully paid down by the final month.

Equipment leasing suits practices that upgrade frequently

A finance lease or operating lease means the lender owns the equipment and you rent it for a fixed term. At the end, you can buy it for a residual amount, refinance it, or hand it back and upgrade.

This structure makes sense for technology that becomes outdated quickly, like ultrasound machines, digital X-ray systems, or laser platforms where manufacturers release new models every few years. You're not stuck with aging equipment. Instead, you roll into a new lease when the term ends and keep your practice current without a large capital outlay each cycle.

Lease payments are generally fully tax deductible as an operating expense, but you don't claim depreciation because you don't own the asset. The GST treatment differs too depending on whether it's a finance lease or operating lease, so check with your accountant before signing.

How lenders assess medical equipment finance applications

Lenders look at your practice's trading history, cash flow, and how much income the equipment is likely to generate. Most want to see at least 12 months of financial statements, though some specialist medical lenders will consider shorter trading periods if you're an established practitioner opening a new clinic.

They'll also assess the equipment itself. High-demand devices like ultrasounds, dental chairs, and autoclaves are seen as lower risk because they hold resale value and are used across many practices. Niche or experimental equipment might require a larger deposit or attract a higher interest rate because it's harder to recover value if the loan defaults.

In Coffs Harbour, where many practices are small to medium-sized and owner-operated, lenders also consider your personal financial position. If the practice is structured as a sole trader or partnership, your personal income, assets, and credit history will factor into the approval.

Vendor finance and dealer finance offer speed but less flexibility

Some medical equipment suppliers offer their own finance arrangements through a preferred lender. You fill out an application at the point of sale and get conditional approval within hours, sometimes the same day.

The upside is speed. The downside is you're usually locked into one lender with one interest rate and one set of terms. You don't get to compare options or negotiate structure. If the supplier's lender quotes 8.5% and an alternative lender would do 6.9%, you won't know unless you shop around before signing.

Working with a broker who has access to asset finance options from banks and lenders across Australia means you can compare rates and structures before committing. That might save you thousands over the life of the loan, especially on high-value equipment where a 1.5% rate difference translates to significant interest over five or seven years.

How balloon payments affect your cashflow and total cost

A balloon payment is a lump sum due at the end of the loan term, typically 20% to 40% of the original loan amount. It reduces your monthly repayment during the term but means the loan isn't fully paid off when the final regular payment is made.

In a scenario where you're financing a $120,000 laser system over five years with a 30% balloon, your monthly repayment might be $1,800 instead of $2,400. That frees up $600 per month during the term, but you'll owe $36,000 at the end. You can pay it as a lump sum, refinance it, or trade in the equipment and use the sale proceeds to clear the balance.

Balloon payments suit practices that expect revenue growth or plan to upgrade the equipment before the term ends. They don't suit practices with tight cashflow that can't easily absorb a $30,000 or $40,000 bill in year five.

What documents you'll need to apply

Most lenders ask for recent financial statements, bank statements covering the past three to six months, a quote or invoice for the equipment, and proof of ABN and GST registration. If you're a newer practice or purchasing high-value equipment, they might also request a business plan or revenue forecast.

Practices operating through a company structure will need to provide company financials and may be asked for a director's guarantee. That means you're personally liable if the business can't meet the repayments, which is standard for small to medium-sized practices where the directors are also the practitioners.

If you're considering business loans alongside equipment finance to cover fit-out or working capital, some lenders will assess both applications together, which can speed up the process and sometimes improve the rate if the combined loan amount is higher.

How to structure finance around your billing cycle

Medical practices in Coffs Harbour often see revenue lags between service delivery and payment, especially if you're billing through Medicare, private health funds, or DVA. Payments might take two weeks or longer to clear, and if your finance repayment is due mid-month but your bulk billing deposits arrive at month-end, you can end up short.

Some lenders let you align your repayment date with your cash cycle. If you know your Medicare payments hit your account between the 25th and 30th of each month, you can request repayments to come out a few days later. That small adjustment can prevent overdraft fees and cashflow strain.

You can also structure repayments to align with revenue growth. If you're adding a new service that will take three to six months to build a patient base, some lenders offer a repayment holiday or reduced payments for the first few months. You'll pay more interest over the life of the loan, but it gives the equipment time to start generating income before the full repayment kicks in.

When to refinance or upgrade existing equipment

If you financed equipment three or four years ago and rates have dropped, or your practice's financial position has improved, refinancing can reduce your repayment or shorten the term. Lenders assess refinancing applications the same way they assess new finance, so you'll need current financials and evidence that the equipment still has value.

Upgrading mid-term is common with technology-dependent equipment like imaging devices. If you're two years into a five-year lease on an ultrasound and a new model offers better imaging or faster processing, some lenders let you trade up. They'll assess the residual value of the current equipment, apply it to the outstanding balance, and roll the shortfall plus the new equipment cost into a fresh loan. That keeps your repayment predictable and your technology current without a large upfront cost.

Call one of our team or book an appointment at a time that works for you. We'll look at your equipment needs, compare lenders, and structure finance that fits your cashflow and tax position without locking you into vendor terms you haven't compared.

Frequently Asked Questions