---
title: Equipment & Asset Finance Melbourne | Chattel Mortgage | GNT Finance
description: Chattel mortgage, finance lease, hire purchase and novated lease compared with real numbers. Finance trucks, plant, fit-out and vehicles without draining working capital.
url: https://gntfinance.com.au/services/asset-and-equipment-finance/
section: services
updated: 2026-09-02
author: Gorakh Timilsina, GNT Finance
---

# Asset, Vehicle and Equipment Finance

**In short:** Asset finance lets a business buy a vehicle, truck, machine or fit-out without paying cash upfront, using the asset itself as security. The four common structures are a chattel mortgage, a finance lease, a commercial hire purchase and a novated lease, and they differ in who owns the asset, how GST is treated and what you can claim. The right one depends on your GST accounting method and your tax position.

Most business owners are shown one structure by the dealer's finance desk and never told the other three exist. The difference is not trivial: on a $90,000 truck the GST timing alone moves tens of thousands of dollars of cash flow in the first quarter.

## The four structures compared

| | Chattel mortgage | Finance lease | Commercial hire purchase | Novated lease |
|---|---|---|---|---|
| Who owns the asset during the term | You (the lender takes a mortgage over it) | The lender | The lender, until the final payment | The lender; the employer makes the payments |
| Appears on your balance sheet | Yes, as an asset and a liability | Depends on the accounting standard applied | Yes | No, it sits with the employee |
| GST on the purchase price | Claimable upfront in your next BAS if you report on a cash basis | Not claimable upfront; GST applies to each rental | Claimable upfront in most cases | Handled through the employer |
| GST on the repayments | No GST on the principal and interest | GST applies to each lease rental | No GST on the instalments | Handled through the employer |
| Typical tax treatment | Claim depreciation on the asset and the interest portion | Claim the lease rentals | Claim depreciation and the interest charge | Salary packaged; fringe benefits tax rules apply |
| Balloon or residual allowed | Yes | Yes, an ATO-set minimum residual applies | Yes | Yes, an ATO-set minimum residual applies |
| Best suited to | A business registered for GST that wants to own the asset | A business that wants the payment treated as an expense | A business wanting ownership at the end without a chattel mortgage | An employee packaging a car through their salary |

Treatment depends on your circumstances and your GST accounting method. Confirm the tax outcome with your accountant or check the current rules at [ato.gov.au](https://www.ato.gov.au) before you choose — this page is not tax advice.

## Worked example: a $90,000 truck

A transport operator registered for GST, reporting on a cash basis, buys a prime mover for $99,000 including GST ($90,000 plus $9,000 GST). Illustrative pricing at 8.00% p.a. over five years with a 20% balloon.

**Chattel mortgage**

- Amount financed: $99,000, less a $9,000 deposit, so $90,000 financed.
- Balloon at 20% of the financed amount: $18,000 due at month 60.
- Monthly repayment on $90,000 over 60 months at 8.00% p.a. with an $18,000 balloon: about **$1,580**.
- Total of 60 repayments: $94,800, plus the $18,000 balloon = $112,800.
- Interest cost across the term: $112,800 − $90,000 = **$22,800**.
- **The GST timing benefit:** the full $9,000 of GST on the purchase can generally be claimed in the next BAS. If your BAS is lodged the following month, that is $9,000 back in the business within weeks rather than dribbled out over five years.

**Finance lease, same asset**

- The lender buys the truck and leases it to you. Each monthly rental carries GST, which you claim as you go.
- You claim the rental as an operating expense rather than depreciating the asset.
- At the end you pay the residual to take ownership, refinance it, or return the asset.

The chattel mortgage usually wins for a GST-registered business on a cash basis, because the upfront input tax credit is worth real money now. The lease can win where the business is not GST-registered, wants the asset off the balance sheet, or replaces equipment on a short cycle.

### What a balloon really costs

A balloon lowers the monthly payment and raises the total cost. Same truck, same rate, no balloon:

- Monthly repayment on $90,000 over 60 months at 8.00% p.a. with no balloon: about **$1,825**.
- Total repaid: $109,500. Interest: **$19,500**.

So the 20% balloon saves $245 a month but costs $3,300 more in interest, and leaves an $18,000 bill at month 60 that you will either pay in cash or refinance again. Balloons make sense when the asset holds value and you genuinely intend to trade it at the end. They are dangerous when the residual exceeds what the asset will be worth, which is common on light commercial vehicles driven hard.

## Assets we finance

- **Vehicles.** Utes, vans, prime movers, rigid trucks, trailers, buses and courier fleets. Business-use vehicles go into commercial asset finance; a personal car goes through our [car loans](/services/car-loans/) service, which is regulated consumer credit and works differently.
- **Plant and construction equipment.** Excavators, skid steers, loaders, compactors, scissor lifts, concrete equipment.
- **Manufacturing and agricultural machinery.** CNC machines, packaging lines, tractors, headers, irrigation.
- **Medical, dental and allied health equipment.** Chairs, imaging, sterilisation, practice fit-out.
- **Hospitality fit-out.** Commercial kitchens, cool rooms, coffee machines, point-of-sale.
- **Technology.** Servers, laptop fleets, and in some cases software licences bundled into a facility.

Second-hand assets are financeable, but the asset's age at the end of the term matters more than its age today. A common approach is a limit of 12 to 15 years old at contract end, which means a five-year term on a seven-year-old truck is fine and a five-year term on a twelve-year-old one is not.

Where the asset is a building rather than a machine, see [commercial property loans](/services/commercial-property-loans/). Where you are a sole trader whose business income also has to support a mortgage, read [self-employed loans](/services/self-employed-loans/) first, because the two applications interact.

## Low doc and fast-track asset finance

For established ABNs there is a well-developed "no financials" path: many lenders will approve asset finance up to a set limit on the strength of the ABN age, GST registration, a clean personal credit file and property ownership, without tax returns. Above that limit, or without property, full financials are required.

Where it applies, a low doc asset approval can come back within a day. It usually prices a little above a fully verified application, and the limit applies across all facilities with that lender, not per asset. If you are financing a fleet, sequencing matters. See [low doc loans explained](/guides/low-doc-loans-explained/) for the broader picture.

## Novated leases and your home loan

A novated lease is a three-way arrangement between you, your employer and the financier: the employer deducts the payment from your pre-tax salary. It can be genuinely tax-effective, particularly for eligible electric vehicles.

It also has a consequence people discover too late. When you apply for a home loan, most lenders add the novated lease payment back as a liability and assess your gross salary, rather than accepting the reduced package figure on your payslip. A $1,100-a-month novated lease can therefore cut your home-loan borrowing power by a six-figure sum. If you are planning to buy a home in the next two years, model both before you sign. Our [borrowing power calculator](/calculators/borrowing-power/) and the [how to improve borrowing power](/guides/how-to-improve-borrowing-power/) guide cover the mechanics.

## What we need from you

| Path | Documents |
|---|---|
| Low doc, established ABN | ABN and GST registration details, driver licence, the supplier invoice or quote, evidence of property ownership |
| Full doc | The above plus two years of tax returns and financials, year-to-date profit and loss, and six months of bank statements |
| New ABN or start-up | The above plus a business plan, evidence of industry experience, and usually a larger deposit or property security |

Private-sale purchases need the seller's details and, for vehicles, a PPSR search to confirm there is no existing finance registered against the asset. We run that as part of the process.

## Frequently asked questions

### Can a sole trader get equipment finance?

Yes. A sole trader with an active ABN, GST registration where turnover requires it, and a clean credit file is a normal applicant. Property ownership widens the low doc options considerably. Where the asset is used partly privately, the business-use percentage affects your tax claim, so confirm that split with your accountant.

### Is the interest on equipment finance tax deductible?

Under a chattel mortgage or hire purchase you generally claim the interest portion of each payment plus depreciation on the asset. Under a finance lease you generally claim the lease rental instead. The claim is limited to the business-use proportion, and car limits can cap depreciation on passenger vehicles. Check your position with your accountant or at ato.gov.au.

### How much deposit do I need?

Often none. Many asset finance approvals are for 100% of the invoice, and some include the GST as well. A deposit helps if the asset is older, the ABN is young, the industry is higher risk, or the amount sits above the lender's low doc limit. Contributing the GST amount as a deposit and then claiming it back in your BAS is a common and sensible move.

### What happens at the end of a balloon or residual?

You have three choices: pay it out in cash, refinance the balance over a further term, or sell or trade the asset and settle the balance from the proceeds. Refinancing a balloon is usually possible but is a fresh credit application, so do not assume it. The risk to manage is a residual that exceeds the asset's resale value at that point.

### Can I finance an asset I am buying privately rather than from a dealer?

Yes. Private sales are financed routinely, with the lender paying the seller directly after a PPSR search confirms no existing security interest and, for vehicles, a check of the registration and identification numbers. Expect slightly more paperwork and sometimes a valuation or inspection. Never pay a private seller yourself and then seek reimbursement.

### Does equipment finance show on my personal credit file?

Commercial asset finance is generally not reported on your consumer credit file, which is one reason businesses use it in preference to a personal loan. The director's guarantee behind it is still a real liability, and a home-loan assessor will ask about your business commitments and see the repayments in the bank statements, so it is not invisible.

## Talk to GNT Finance

Send us the quote and tell us how the asset earns its keep, and we will come back with the structure, the true cost and the sensible term rather than whatever the dealer's finance desk had on the screen. GNT Finance works with operators across Melbourne's north and west and Australia-wide, in English, Nepali or Hindi, with an interpreter in your language on request. [Book a free consultation](/contact/) or call 0426 403 703.

*This page is general information only and not legal, tax or financial advice. Tax treatment depends on your circumstances — confirm it with the ATO or your accountant. Lending criteria, terms, fees and charges apply.*