What is asset finance?
It refers to a type of financing used by businesses and individuals to acquire assets, such as equipment, machinery, vehicles, or other tangible assets, without having to pay the full purchase price upfront. Asset finance allows borrowers to spread the cost of acquiring assets over time through regular repayments, while the asset itself serves as security or collateral for the loan.
Interest rates for asset finance loans in Australia may be fixed or variable and depend on factors such as the borrower's creditworthiness, the type of asset, the loan term, and prevailing market conditions. Lenders may also charge fees such as application fees, documentation fees, and early termination fees.
There are several types of asset finance products available in Australia, including:
- Chattel Mortgage - a type of loan where the borrower owns the asset from the outset, and the lender takes a mortgage over the asset as security for the loan.
- Finance Lease - a leasing arrangement where the lender (lessor) purchases the asset and leases it to the borrower (lessee) for an agreed period, with the option to purchase the asset at the end of the lease term.
- Hire Purchase - a financing arrangement where the borrower hires the asset from the lender for an agreed period, with the option to purchase the asset at the end of the hire term.
- Equipment Rental - a rental agreement where the borrower rents the asset from the lender for a fixed period, with the option to return the asset at the end of the rental term or purchase it outright.
What is the interest rate on asset finance loan?
The interest rates can range from around 4% to 20% per annum, although rates outside of this range may also be possible depending on specific circumstances. They can vary depending on several factors, including the type of asset being financed, the borrower's creditworthiness, the loan term, prevailing market conditions, and the lender's policies.
The rates for asset finance loans may be fixed or variable, with fixed rates providing certainty in repayments and variable rates potentially offering flexibility if market interest rates change.
Business loan calculations for 3 years (example)
| Amount, $ | Rate, % | Accrued %, $ |
| 20,000 | 8.35% | 2,575 |
| 20,000 | 10.35% | 3,191 |
| 20,000 | 12.35% | 3,808 |
| 50,000 | 8.45% | 6,514 |
| 50,000 | 10.45% | 8,055 |
| 50,000 | 12.45% | 9,597 |
| 200,000 | 8.55% | 26,363 |
| 200,000 | 10.55% | 32,529 |
| 200,000 | 12.55% | 38,696 |
| 500,000 | 8.65% | 66,677 |
| 500,000 | 10.65% | 82,094 |
| 500,000 | 12.65% | 97,510 |
Where can I find asset finance brokers in Australia?
Many asset finance brokers who specialize in helping businesses and individuals secure asset finance solutions tailored to their needs. They can provide valuable expertise, guidance, and access to competitive loan products to assist clients in achieving their financing goals.
You can find asset finance brokers through Online Directories, Industry Associations, Referrals and Recommendations, Online Search Engines, Social Media and Online Platforms, Local Business Networks and Events.
