Interest rates are one of the most important factors when evaluating equipment finance, yet they’re also one of the most variable. Unlike home loans where rates are widely published and easily compared, equipment finance rates depend heavily on the individual borrower’s circumstances, the asset being financed, and the lender’s risk appetite at any given time.
This guide breaks down what determines your equipment finance interest rate, what rates Australian businesses can realistically expect in 2026, and how to position yourself for the best possible outcome.
At Mortgage & Finance Advisory, we work with over 60 lenders including specialist equipment finance lenders and regularly negotiate rates for clients across Geelong, the Surf Coast, Melbourne, and regional Victoria. Here’s what we’re seeing in the market right now.
The single biggest factor affecting your rate is your business’s financial strength and how much documentation you can provide. Here’s what different business profiles can typically expect in 2026:
| Business Profile | Typical Rate | Documentation | Max Loan |
|---|---|---|---|
| Established (3+ years, clean credit, strong revenue) | 5.5% to 7.5% | Full doc (tax returns, ATO portal) | $2M+ |
| Mid-range (1-3 years, reasonable credit) | 7.0% to 9.5% | Low doc (bank statements) | $500K |
| Start-up (under 12 months) | 9.0% to 14.0% | Low/no doc + deposit | $150K |
| Credit issues (defaults, judgments) | 10.0% to 15.0% | Specialist lender assessment | Varies |
| No doc (ABN 24+ months, minimal paperwork) | 8.0% to 12.0% | ABN + equipment quote only | $150K |
Lenders consider multiple factors when setting your rate. Understanding these helps you position your application for the best outcome.
The longer your business has been operating, the lower risk you represent to lenders. Businesses with 3+ years of trading history access the most competitive rates. Under 2 years is considered higher risk, and under 12 months significantly limits your options and increases pricing. If you’re a new business owner but have extensive industry experience, some lenders will factor this in favourably.
Both your personal credit score and your business’s credit history are assessed. A clean credit file with no defaults, judgments, or late payments will attract the best rates. Minor historical credit issues (paid defaults over 12 months old, for example) are manageable with the right lender but will push your rate up. Current defaults or judgments require specialist lenders at premium rates.
Lenders assess your business’s revenue, profitability, and ability to service the proposed repayments alongside existing commitments. Strong, consistent revenue with healthy margins gives lenders confidence, resulting in better pricing. Seasonal businesses may need to demonstrate their capacity through annual averages rather than monthly snapshots.
The equipment you’re financing directly affects your rate because it determines the lender’s security position. New equipment from major manufacturers attracts the best rates because it holds value well and has a strong resale market. Used equipment is usually priced 0.5% to 1.5% higher depending on age. Specialised or niche equipment with a limited resale market may carry a premium.
| Asset Category | Rate Impact | Reason |
|---|---|---|
| New trucks, earthmoving, vehicles | Best rates available | Strong resale value, large lender market |
| New medical/dental equipment | Competitive rates | Essential assets, professional borrowers |
| Used equipment (under 5 years) | +0.5% to 1.0% | Moderate depreciation risk |
| Used equipment (5-10 years) | +1.0% to 2.0% | Higher depreciation risk, shorter terms |
| IT hardware, computers | +0.5% to 1.5% | Rapid depreciation, limited resale |
| Specialised/custom equipment | +1.0% to 3.0% | Limited resale market, harder to value |
Very small loans (under $20,000) can attract higher rates because the lender’s fixed costs of processing and administering the loan are spread over a smaller amount. The best rates typically apply to loans of $50,000 to $500,000. Very large loans above $1 million may also be priced differently as they require more detailed assessment.
Shorter terms (1-3 years) sometimes attract slightly lower rates than longer terms (5-7 years) because the lender’s exposure period is shorter. However, the difference is usually modest (perhaps 0.25% to 0.5%), and the lower monthly repayments of a longer term may outweigh the slightly higher rate for your cash flow.
There are several strategies you can use to improve the rate you’re offered:
Provide full documentation: The more financial information you can provide, the more comfortable lenders are, and the better your rate. If you have up-to-date tax returns and can provide ATO portal access, always go full doc.
Contribute a deposit: Even a 10-20% deposit signals lower risk and can reduce your rate by 0.5% to 1.0%. It also reduces the amount financed, lowering your total interest cost.
Choose mainstream assets: Financing a brand-new Caterpillar excavator will always attract a better rate than a 15-year-old custom-built machine, purely because of resale value and security.
Clean up your credit: Before applying, check your credit report for any errors and address any outstanding issues. Paying off small defaults before applying can improve your options significantly.
Use a broker: This is the simplest and most effective way to get a better rate. A broker compares dozens of lenders simultaneously and leverages competition to negotiate the best possible pricing for your situation.
When evaluating equipment finance offers, always look at the comparison rate, not just the headline interest rate. The comparison rate includes the interest rate plus any fees and charges (establishment fees, monthly account fees, documentation fees), giving you a truer picture of the total cost of borrowing.
For example, a loan with a 6.5% interest rate plus $500 in establishment fees and $10 monthly account fees might have a comparison rate of 7.1%. Another lender offering 6.9% with no additional fees might have a comparison rate of 6.9%, making it the cheaper option despite the apparently higher interest rate.
Understanding how lenders calculate equipment finance rates helps you negotiate better deals. Equipment finance rates are typically derived from a base rate (often the bank bill swap rate or the lender’s cost of funds) plus a risk margin. The risk margin varies based on your credit profile, business financials, the equipment type, and the loan-to-value ratio. A strong applicant financing a well-known brand of machinery might attract a margin of 2-3% above the base rate, while a newer business financing niche equipment could face margins of 5-7% or more.
Most equipment finance in Australia uses a fixed rate for the term of the agreement, which provides certainty of repayments. However, variable rate options exist and can be advantageous when interest rates are expected to fall. The comparison rate for equipment finance includes the base interest rate plus any establishment fees and ongoing charges, giving you a more accurate picture of the true cost. Always compare using the comparison rate rather than the advertised headline rate, as establishment fees of $400-$800 and monthly account fees of $10-$15 can add up significantly over a 5-year term.
Rate Comparison: What the Numbers Actually Mean
On a $100,000 equipment finance deal over 5 years, the difference between 5.9% and 7.9% is approximately $5,500 in total interest, or $92 per month. While 2% might not sound like much, across multiple equipment purchases for a growing business, this compounds significantly. A construction company financing $500,000 worth of equipment would save over $27,000 by securing the lower rate. This is why comparing multiple lender offers through a broker is so important.
Different industries attract different equipment finance rates due to varying risk profiles and asset values. The transport and logistics sector continues to enjoy some of the most competitive rates in 2026, with prime borrowers accessing rates from 5.5% for new trucks and trailers. This reflects the strong resale market for commercial vehicles and the essential nature of transport equipment. Mining and resources equipment finance rates have stabilised after a volatile period, with rates typically ranging from 6.5% to 9% depending on the commodity cycle outlook and equipment specifics.
Healthcare and medical equipment finance maintains consistently competitive rates due to the stability of the sector and high asset retention values. Dental chairs, imaging equipment, and diagnostic machines typically attract rates between 5.5% and 7%. The agricultural sector sees more seasonal variation in rate offerings, with some lenders providing reduced rates during planting and harvest seasons to encourage equipment upgrades. Construction equipment rates in the Geelong and regional Victoria market currently sit between 5.9% and 8.5%, with the wide range reflecting the diversity of equipment types and borrower profiles in the sector.
Beyond maintaining a strong credit profile, several strategies can help you secure better equipment finance rates. Timing your application when your business financials are strongest (typically after a profitable financial year) means you can present the best possible picture to lenders. Providing a larger deposit reduces the lender’s risk exposure and almost always results in a rate reduction. Even a 10-20% deposit on equipment finance can reduce your rate by 0.5-1% compared to a zero-deposit application.
Bundling multiple equipment purchases into a single finance facility can also improve your rate. Lenders offer volume discounts when you finance a fleet of vehicles or multiple pieces of machinery simultaneously. We recently helped a Geelong logistics company finance seven new trucks as a single facility at a rate 0.8% lower than they would have achieved financing each individually. Additionally, offering additional security (such as a property guarantee or a personal guarantee from a director with strong personal assets) can open up rates that would otherwise be unavailable to the business entity alone.
Client Example: Rate Negotiation Success
A plumbing business in Torquay was quoted 8.5% by their bank for a $65,000 service vehicle. They came to Mortgage & Finance Advisory for a second opinion. We identified that their business had been trading profitably for 8 years with clean credit, a much stronger profile than the bank’s rate reflected. By approaching three specialist equipment finance lenders simultaneously, we secured an approval at 6.2% with no deposit required. Over the 5-year term, this saved the client $4,680 in interest, more than covering our brokerage fee several times over.
Balloon payments (also called residual values) are commonly used in equipment finance to reduce monthly repayments. A balloon of 20-30% means you defer that portion of the principal to the end of the term, paying interest on the full amount but only amortising 70-80% during the regular repayment period. This can reduce your monthly payments by 15-25%, improving business cash flow during the finance term. However, it is important to understand that you will owe the balloon amount at the end of the term, and you will need to either pay it out, refinance it, or trade in the equipment.
Some lenders charge a slightly higher interest rate for facilities with balloon payments, particularly when the balloon exceeds 30% of the original finance amount. The rationale is that higher balloons increase the lender’s residual risk: the chance that the equipment’s value at the end of the term is less than the balloon amount owing. For this reason, we recommend matching your balloon payment to the expected residual value of the equipment. A 5-year-old excavator might retain 35-40% of its new value, so a 30% balloon would be well supported by the asset’s worth at term end.
Equipment finance rates are almost always fixed for the entire term of the agreement. This means your repayments won’t change regardless of what happens with the RBA cash rate or broader interest rate market. This gives businesses certainty in their budgeting and cash flow planning.
Yes, rates are often negotiable, particularly through a broker. Lenders have rate discretion and will sometimes offer better pricing to secure quality business, especially for larger loans, strong financial profiles, or where they know they’re being compared against competitors.
Equipment finance rates are typically 1% to 5% higher than home loan rates. This is because equipment depreciates (unlike property), the loan terms are shorter, and the amounts are generally smaller. However, the tax deductibility of equipment finance interest and repayments means the effective after-tax cost is often lower than it first appears.
Yes, though less dramatically than home loan rates. Equipment finance rates are influenced by the wholesale funding costs of lenders, competition in the market, and broader economic conditions. End-of-financial-year promotions are common as lenders compete for business during the busy EOFY equipment purchasing season.
A deposit generally helps, but the relationship isn’t always linear. Moving from 0% to 10-20% deposit often provides the biggest rate improvement. Beyond 20%, the incremental benefit to your rate diminishes, though it still reduces your total interest cost by lowering the loan amount.
Find out exactly what rate you qualify for. We compare 60+ lenders to find your best equipment finance rate, obligation free.
Call 03 9020 2699
With access to 60+ lenders including specialist equipment lenders, Melanie consistently secures rates well below what businesses achieve going direct to their bank.
Our experienced brokers compare options across 60+ lenders to find the right solution for your situation.
Director & Senior Finance Broker
With years of experience in mortgage broking and finance, Melanie helps clients across Geelong, the Surf Coast, Melbourne and regional Victoria navigate the complexities of home loans and business finance. Contact our team on 03 9020 2699.
