Asset finance funds the purchase or use of vehicles, machinery and equipment through a loan or lease. The facility determines ownership and what happens at the end of the term.
For mortgage brokers adding asset finance, check that your appointment covers the transaction before quoting it. Then match the facility to the client's intended use.
What is Asset Finance?
Asset finance spreads the cost of an asset over the period a business uses it. This leaves working capital available for wages and stock.
For example, a builder can finance a work vehicle while using it to earn income, instead of paying the full purchase price upfront. Repayments still fall due during quiet periods.
The trade-off is repossession risk if payments stop. A multi-year contract can also be expensive to exit when the business needs a different asset.
The Main Facility Types
The facility type determines whether the client buys the asset, rents it or borrows against something already owned.
- Hire purchase spreads the purchase price across instalments, with ownership transferring after the final payment. It suits a client who wants to keep the asset.
- A finance lease gives the client use of an asset owned by the lessor. It suits longer use, with residual and end-of-term obligations set by the contract.
- An operating lease suits a limited holding period or equipment the client expects to replace. Check return conditions and any usage limits.
- Equipment leasing covers leasing arrangements for machinery or technology. It suits regular upgrades where the agreement permits replacement.
- Asset refinance releases cash against an existing asset. It suits a business that needs working capital while continuing to use its equipment.
- Contract hire covers vehicle use and can bundle maintenance. It suits fleet operators who want predictable scheduled costs.
- A chattel mortgage funds a vehicle or equipment purchase that the business owns from day one, with the asset securing the loan.
Equipment leasing is a broad description, so compare the actual contract with the ownership and exit position the client needs.
Eligibility and Credit Checks
Funders assess business financials, time trading and the principals' credit records. They also consider the asset's value and whether the business can meet repayments.
Ask which financial statements or bank statements the lender needs before submitting. The required evidence depends on the lender and the application.
Equifax scores run from 0 to 1200. Experian also uses a 0 to 1200 range.
Individuals can request a free credit report every three months. There is no national score cut-off that guarantees approval: each funder applies its own lending criteria.
The Licensing Boundary Brokers Must Check
Business-purpose asset finance often falls outside the National Consumer Credit Protection Act 2009 (NCCP Act). The borrower's identity and the credit purpose determine whether the National Credit Code applies.
A mortgage-focused appointment does not automatically cover every asset finance transaction. Confirm with your licensee or aggregator that your appointment covers the facility type before arranging it.
Use the Australian Securities and Investments Commission (ASIC) credit-licensing guidance and RG 203, Do I need a credit licence? when checking your authority.
Keep the regulatory question separate from lender accreditation and your commercial appointment. A facility outside consumer credit legislation still needs the provider's required authority and a clear explanation of its costs.
Providers in the Market
ScotPac funds new and pre-owned assets, while Swoop connects Australian businesses with lenders for asset finance. These are examples of different routes to funding.
Verify each provider's current product range and eligibility before quoting it. A provider's asset finance offering does not establish that your brokerage has access to it.
Compare asset finance aggregators for panel access. The CAFBA explainer covers the Commercial & Asset Finance Brokers Association of Australia and industry membership.
Matching the Facility to the Client
Before comparing rates, establish whether the client wants ownership and how long they need the asset. Ask the client three questions.
- Do you need to own the asset at the end? Consider hire purchase, or a chattel mortgage if ownership from the start matters.
- How long will you keep it? Regular upgrades can suit operating or equipment leases, subject to the contract's return and replacement terms.
- Do you want maintenance bundled? Contract hire can suit fleets where the client wants vehicle use and maintenance in one agreement.
If the client needs cash without buying another asset, consider asset refinance. For borrowing that is not tied to equipment, compare business loans and other business credit.
Before using a home-loan offset or refinancing a mortgage to buy equipment, price that approach against a purpose-built facility. Compare the total repayment cost over the intended holding period and the security at risk.
Next Step: Confirm Your Appointment, Then Compare Two Written Quotes
Confirm your appointment covers the facility type, then obtain two written quotes for the same asset and term.
Compare the total cost including fees, the residual or final payment and the exit terms. Confirm the ownership position and any maintenance obligations before the client signs.
