Equipment Finance for a Mini Excavator: Chattel Mortgage, Lease and What the Repayment Really Is
The finance structures used for compact machinery in Australia, what each means for ownership and tax, the numbers behind a repayment and the questions to ask before signing.
This is general information, not financial advice. Rates, terms and tax rules change; confirm the current position with the lender and your accountant.
The structures
Chattel mortgage. You own the machine from day one and the lender holds a mortgage over it. The most common structure for plant: the GST is claimed upfront by a registered business, depreciation and interest are deductible, and the machine is yours at the end. Balloons are available.
Finance lease. The lender owns the machine and you pay to use it, with a residual at the end. Payments are deductible; GST is claimed on each payment. Less common for compact machines now.
Rental or hire purchase. Variations on the lease; ask what happens at the end of the term.
Private buyers typically use a secured personal loan or a chattel mortgage without the tax benefits.
The numbers
A repayment is set by four things: the amount financed (price less deposit), the interest rate, the term in months and any balloon or residual. A longer term or a balloon lowers the monthly payment and raises the total interest. The finance estimate on this site shows all four for any Rippa machine at today's price.
Ask the lender for the comparison rate, the fees, the early payout terms and whether the rate is fixed.
Tax for business buyers
Claim the GST (on a chattel mortgage, upfront), deduct the interest, depreciate the machine or use the instant asset write-off if the machine is under that year's threshold and installed ready for use before 30 June, and deduct the business share of running costs. Keep a logbook of hours if there is private use.
What to compare
- The dealer's finance partner against your own bank or broker.
- The monthly figure against what you currently spend on hire.
- The total cost over the term against paying cash and losing the interest on the cash.
Applying
Rippa Australia arranges finance through its partners on the main store; the estimate here is for comparison only. Have your ABN, financials or payslips, and a quote for the machine including freight ready. Approval for compact machinery is usually quick.
Pair this with the five-year cost of ownership to see the repayment in context.