Asset finance is funding used to acquire a specific physical asset — a vehicle, machine, or piece of equipment — with the asset itself acting as security for the loan. This means it doesn’t tie up your property or require a large amount of separate collateral. It covers vehicles, machinery, IT equipment, and more, and is one of the most common ways Australian small businesses fund the tools they need to operate.

The main structures are chattel mortgage (you own the asset from day one, lender registers security over it), finance lease (lender owns the asset, you lease it with an option to purchase at the end), operating lease (lender owns it, you use and return it, ideal for assets you’ll replace often), and hire purchase (similar to a chattel mortgage with different accounting treatment). Which one suits you depends on whether you want to own the asset long-term, how it affects your tax position, and whether you want it on or off your balance sheet.

Not quite — equipment finance is the broad category, and a chattel mortgage is one specific structure within it (the most common one for Australian SMEs who want to own the asset immediately). With a chattel mortgage, you take ownership on day one, the lender registers a security interest against the asset, and you can typically claim depreciation, GST credits, and interest deductions from the outset.

The main considerations are that you’re committed to the asset’s full value even if it depreciates faster than expected, and if you have a balloon payment structured at the end of the term, you’ll need a plan to refinance or pay it out when that date arrives. It’s also worth checking early payout conditions, since not all chattel mortgages allow this without a fee.

Yes to both, generally. Most chattel mortgages allow early payout, though some lenders apply a small early payout fee or interest adjustment — worth confirming before you sign. And while chattel mortgages are most commonly used by ABN holders and businesses (to access the GST and tax benefits), individuals can access equipment or vehicle finance too, typically through a slightly different product structure depending on the lender.

A balloon payment is a larger lump sum due at the end of the loan term, used to keep your regular monthly repayments lower throughout the loan. The main disadvantage is that you need a plan for that final amount — whether that’s refinancing it, selling the asset, or having the cash ready — because it doesn’t disappear if you haven’t planned for it. Structured well in advance, though, it can be a smart way to keep cash flow lighter during the loan term.