Compare finance types
Equipment loan vs Hire purchase: which is right for your business?
The main difference between a equipment loan and a hire purchase is how they are secured and repaid: a equipment loan suits any business buying income-producing equipment, while a hire purchase suits businesses wanting eventual ownership where a lender or accountant specifically prefers this structure.
Equipment loan vs Hire purchase at a glance
| Equipment loan | Hire purchase | |
|---|---|---|
| What it is | An equipment loan is a secured business loan used to buy machinery, vehicles or technology, with the equipment itself as security and fixed repayments over 1 to 7 years. It covers new and used assets from dealers or private sellers. | Hire purchase is an asset finance structure where the financier buys the asset and hires it to your business for a fixed term, with ownership transferring automatically once the final instalment — including any balloon — is paid. It sits between a lease and a chattel mortgage, and is used less often in Australia since GST reforms favoured the chattel mortgage. |
| Amount | $5,000 – $5,000,000 | $10,000 – $2,000,000 |
| Term | 12–84 months | 12–84 months |
| Indicative rate | 6.9% – 16% p.a. | 7% – 14.9% p.a. |
| Rate type | Fixed | Fixed |
| Security | Secured by the asset | Secured by the asset |
| Repayments | Monthly | Monthly |
| Typical speed | Same day to 48 hours for low-doc | 24–72 hours for low-doc, longer for full-doc |
| Best for | Any business buying income-producing equipment | Businesses wanting eventual ownership where a lender or accountant specifically prefers this structure |
| Consider the other if | General working capital with no asset purchase | Most GST-registered businesses, where a chattel mortgage usually delivers a better GST outcome |
| Tax | Interest and depreciation are generally deductible. | Interest and depreciation are generally claimable, and GST treatment differs from a chattel mortgage. Confirm with your accountant before choosing. |
Rates shown are indicative ranges observed across our lender panel for the period stated. They are not an offer or quote. Your rate depends on your business, the lender, the amount, the term and the security offered. The lender makes the final credit decision.
When to choose a equipment loan
A equipment loan is usually the better fit for any business buying income-producing equipment. Its main advantages are secured pricing, low-doc pathways for established businesses, new, used and private-sale assets. Consider the alternative if general working capital with no asset purchase.
When to choose a hire purchase
A hire purchase is usually the better fit for businesses wanting eventual ownership where a lender or accountant specifically prefers this structure. Its main advantages are ownership transfers automatically on the final payment, fixed instalments with an optional balloon, secured pricing, well below unsecured lending. Consider the alternative if most gst-registered businesses, where a chattel mortgage usually delivers a better gst outcome.
Equipment loan
An equipment loan is a secured business loan used to buy machinery, vehicles or technology, with the equipment itself as security and fixed repayments over 1 to 7 years. It covers new and used assets from dealers or private sellers.
Hire purchase
Hire purchase is an asset finance structure where the financier buys the asset and hires it to your business for a fixed term, with ownership transferring automatically once the final instalment — including any balloon — is paid. It sits between a lease and a chattel mortgage, and is used less often in Australia since GST reforms favoured the chattel mortgage.