Quick answer
To compare equipment finance rates fairly, ignore the headline rate and add up everything you will pay over the term: every repayment, all fees and any final (balloon) payment, then subtract what the machine should be worth at the end. Two offers with the same rate can differ by thousands of dollars once term, fees and the balloon are counted.
Key points
- A lower repayment often comes from a longer term or a balloon, not a better deal.
- Total payable = repayments + fees + balloon. Compare that number, not the rate.
- A balloon is only 'free' if the machine is still worth more than it at the end.
- The $20,000 instant asset write-off is now permanent, but it changes your tax, not the lender's bill.
Three quotes for the same machine rarely look alike. One lists a low rate and a big fee, another quotes a gentle monthly repayment with a lump sum at the end, a third is an unsecured loan with a short term. Setting them against each other by rate is like comparing three cars by the colour of the paint. This guide shows how to turn every offer into one number in dollars, using a single $80,000 machine as the example.
What should an equipment finance rates comparison actually include?
A rate tells you how the lender prices the money. It does not tell you how long you pay, what else you pay, or what is left owing at the end. A fair comparison needs the same six inputs from every offer:
- Amount financed, after any deposit or trade-in
- Term, in months
- Repayment amount and how often it is taken
- All fees: establishment, account-keeping, documentation, early payout
- Balloon or residual, the lump sum due at the end
- Security: whether the machine, other assets or a guarantee stand behind it
Ask for these in writing so each quote is built on the same footing. Our fees page lists the charges to look for.
One $80,000 machine, three offers
Here is an illustration with round numbers. The figures are invented to show the method and are not a quote.
| Offer A: chattel mortgage, no balloon | Offer B: chattel mortgage with balloon | Offer C: unsecured loan | |
|---|---|---|---|
| Amount financed | $80,000 | $80,000 | $80,000 |
| Term | 60 months | 60 months | 36 months |
| Monthly repayment | $1,500 | $1,150 | $2,750 |
| Fees | $600 | $900 | $1,500 |
| Balloon at end | None | $20,000 | None |
| Total payable | $90,600 | $89,900 | $100,500 |
| Security | The machine | The machine | None over the machine |
| Paperwork | Invoice, financials | Invoice, financials | Often bank statements |
The sums are simple: repayments multiplied by months, plus fees, plus any balloon. Offer A is $1,500 × 60 + $600. Offer B is $1,150 × 60 + $900 + $20,000. Offer C is $2,750 × 36 + $1,500.
Three things jump out. Offer B has the lowest monthly repayment by far and the lowest total, but only by $700 on Offer A. Offer C is the most expensive and the heaviest on cash flow, yet it has the shortest term and no security over the machine. And the “cheapest” is only cheapest if you can handle the $20,000 at the end.
What does a balloon really do to the total?
A balloon moves part of the debt to the end of the loan. That lowers repayments, which helps cash flow during the years the machine is earning. The trade-off is a lump sum you need a plan for.
Test it with one question: what will the machine be worth in five years, and is that more than the balloon? If the machine would sell for $35,000, a $20,000 balloon is comfortable. If it would sell for $15,000, you owe $5,000 more than the asset is worth. The balloon is not a discount, it’s a deferral.
Three honest ways to meet a balloon: pay it from cash, sell the machine and settle, or refinance the remainder. Decide which before you sign. Our loan term page covers how terms and balloons interact, and early payout explains what ending a facility early can cost.
How does term change the comparison?
A longer term lowers the repayment but gives interest more time to run, so you generally pay more in total on a like-for-like basis. Offer C looks heavy at $2,750 a month, but it is finished in three years. Offer A and B hold the machine on the books for five.
The question is whether the term fits the life of the machine. A forklift or an excavator may earn for ten years. A laptop or a piece of tech may not last three. Matching term to useful life matters more than chasing the lowest repayment.
Does new versus used equipment change the offer?
Often, yes. Lenders find it easier to value a new, common machine, so terms and balloons tend to be more generous. Used or specialist gear can mean a shorter term, a larger deposit or tighter conditions because it’s harder to value and resell. Private sales are another wrinkle, because some lenders prefer to fund from a dealer or a licensed seller. When comparing, quote the exact machine you intend to buy, not a general category.
Before buying used, run a search on the Personal Property Securities Register (the PPSR) for the serial number. If a previous lender has a registered interest, it can follow the asset to you. The PPSR site has the search.
Where does tax come in?
Tax is a separate question from the lender’s bill, but it can change which offer feels cheapest. Two 2026 facts are worth knowing:
- The ATO states that the $20,000 instant asset write-off is now permanent for small businesses (aggregated turnover under $10 million), from 1 July 2026. It applies per asset, and bigger assets go into the simplified depreciation pool.
- The car limit for 2026–27 is $69,883. It caps the depreciation base for passenger cars, so an expensive ute or SUV that counts as a car may not be fully claimable.
Whether you can deduct the machine, and how GST credits are handled under a chattel mortgage, hire purchase or lease, depends on your circumstances and the structure. Ask your accountant before you pick a structure for tax reasons alone. Our guide to equipment finance structures compares them side by side.
Have a quote or two in hand? See if you qualify and we’ll line them up in dollars with you.
Which offer suits which business?
The cheapest total is not automatically the right answer. Matching the offer to the business matters as much as the arithmetic:
- Offer A suits an owner who wants certainty: a fixed end date, nothing owing at the finish and a total close to the cheapest.
- Offer B suits a business whose income is still ramping up, provided the owner has a credible plan for the $20,000 and the machine is likely to hold its value.
- Offer C suits someone who wants the machine free of any registered interest, perhaps because it is a private sale or the asset is hard for a financier to value, and who can carry the higher repayment for three years.
Notice that the gap between A and B is only $700 over five years, but the cash flow difference is $350 every month. If the business is tight in the first year, that monthly breathing room may be worth more than the small total saving. If cash is comfortable, A’s clean finish may win. The comparison tells you the price of each choice; the decision is yours.
A five-step test for any equipment finance offer
- Get the same inputs from every lender (see the six above).
- Work out total payable: repayments × months + fees + balloon.
- Subtract realistic resale value at the end of the term. That is your true cost of using the machine.
- Check cash flow: can the business carry the repayment in its slowest month?
- Read the exit terms: early payout fees, what happens if you sell the machine, and any cross-security over other assets.
Our loan offer comparer does the arithmetic once you enter each quote, and the business loan comparison tool helps if you’re still deciding between equipment finance and another loan type. For a wider look at counting every dollar, see total cost.
Common traps when comparing equipment quotes
- Comparing a rate on one offer to a repayment on another. They answer different questions.
- Ignoring the balloon, because it doesn’t appear in the monthly figure.
- Missing fees that sit in the contract rather than the headline.
- Treating a longer term as a saving, when it can mean paying more overall.
- Forgetting to ask about security. Some offers add other assets or a guarantee behind the machine.
Ready to compare real offers for your machine?
Comparing equipment finance is easier when someone reads the numbers with you. Tell us about the machine, the seller and your cash flow, and we’ll compare the structures that fit in plain dollars, so you can see what each really costs.
Enquiring takes about 60 seconds, and your credit file isn’t touched just for asking; a credit check only comes up if you decide to go ahead. Your details won’t be sent to a pile of lenders. A real person looks at your situation and calls you. Please fill the form in accurately so we can match the right option first time.
Frequently asked questions
How do I compare equipment finance rates from different lenders?
Ask each lender for the same things in writing: the amount financed, term, repayment amount and frequency, all fees, and any balloon. Then work out the total payable for each and compare those totals. A rate on its own hides fees and balloons, so it is the least reliable single number on the page.
Is a lower monthly repayment on equipment finance a better deal?
Not necessarily. Repayments drop when the term stretches or when part of the debt is pushed into a final payment. You may pay more in total, or face a large lump sum at the end. Compare total payable and check you can meet the balloon.
Does a balloon payment make equipment finance cheaper?
It lowers each repayment, and it can lower the total if the balloon is small and the machine holds its value. But you still owe the balloon. If the asset is worth less than the balloon when it falls due, you either top up from cash, refinance it or lose the difference.
Is new or used equipment cheaper to finance?
It depends on the lender's criteria and the asset. Newer, well-known equipment is easier to value, so lenders are often comfortable with a longer term. Older or niche machines may attract a shorter term, a larger deposit or higher repayments. Get quotes on the actual machine, not a category.
Is an unsecured loan or a chattel mortgage cheaper for equipment?
A secured equipment loan usually has a longer term and lower repayments because the machine backs it. An unsecured loan is simpler and doesn't register over the asset, but it tends to be shorter and cost more in total. Run both through the same total-payable test.
Do equipment finance fees matter if the rate looks low?
Yes. Establishment, account-keeping, early payout and documentation fees add to what you pay, and a fee-heavy offer with a low headline rate can cost more than a plain one. Our fees page and the loan offer comparer show how to count them.
Can I claim equipment I finance under the instant asset write-off?
Generally, small businesses with aggregated turnover under $10 million can immediately deduct eligible assets costing less than $20,000 each, including when financed, if the asset is first used or installed ready for use in the year. Larger assets go through the simplified depreciation pool. Check your own position with your accountant or the ATO.