Quick answer
Equipment finance lets a New Zealand business buy vehicles, machinery, tools or technology with the item itself as security. The lender registers its interest on the Personal Property Securities Register, which often means less paperwork and lower cost than an unsecured loan. Terms usually match the working life of the asset, commonly two to five years, and both new and used equipment can be financed from dealers or private sellers.
Key points
- The equipment is the security, registered on the PPSR.
- Often lighter paperwork than unsecured lending.
- Terms usually match the asset's working life.
- New, used, dealer and private sales can all work.
- Security
- The equipment, registered on the PPSR
- Typical term
- Two to five years
- Common assets
- Utes, vans, trucks, plant, tools, IT
- Useful to have
- Quote or invoice, GST number, statements
When a business needs something physical to earn money, a ute, an excavator, a commercial oven, a CNC machine, financing the item itself is often the simplest route. The lender can see exactly what it’s lending against, and if things go wrong, the asset can be recovered and sold. That security is why equipment finance is usually easier to get, and cheaper, than an unsecured loan for the same amount.
How it works
You choose the equipment and get a quote or invoice. The lender approves the finance, pays the seller, and registers a security interest over the item on the Personal Property Securities Register. You use the equipment and make regular repayments. When the loan is repaid, the registration is removed and the item is yours outright.
What can be financed
| Category | Examples |
|---|---|
| Vehicles | Utes, vans, light trucks, trailers |
| Heavy plant | Excavators, loaders, tractors, forklifts |
| Workshop gear | Lathes, compressors, hoists, welders |
| Hospitality | Ovens, coffee machines, refrigeration |
| Technology | Computers, point-of-sale systems, medical devices |
Specialist or very old items can be harder, because the lender needs confidence it could sell them if needed.
What lenders ask for
The paperwork for equipment finance is often lighter than for other business loans, because the asset carries much of the risk. Expect to provide:
- A quote or invoice with the make, model, year and price.
- Your NZBN or IRD number and GST registration details.
- Recent business bank statements, often three to six months.
- Driver licence or other ID for each director or owner.
- For larger amounts, financial statements or GST returns.
Newer businesses, sole traders and owners with simpler books can often get equipment finance where an unsecured loan would be harder. See low doc business loans if your records are thin.
Choosing the term
Match the term to how long the equipment will earn money for you. A laptop might be financed over two years; a new excavator over five. Too short and the repayments squeeze cash flow; too long and you can still be paying for something that’s worn out. A balloon payment reduces regular repayments but leaves a lump sum at the end, so only use one if you have a plan for it.
Buying privately
Private sales can be good value, but they carry a risk: the seller might still owe money on the item, and a lender’s security can follow the asset to a new owner. A lender will search the PPSR before paying, and you can search it yourself too. For vehicles, check the registration and warrant or certificate of fitness as well.
An illustrative example
A Tauranga mobile mechanic, trading as a sole trader for eighteen months, needs a larger van fitted out with shelving and a compressor. The total cost is $58,000 from a dealer. The business has steady bank deposits and current GST returns, but no property. An equipment finance lender approves a four-year agreement secured on the van and fit-out, registers its interest on the PPSR and pays the dealer directly. Illustrative only.
Equipment finance versus other options
If you’re buying several small items that don’t make good security individually, an unsecured business loan may be easier. If cash flow is the issue rather than the asset, a line of credit is usually the better tool. But for a single item with resale value, equipment finance is often the most efficient way to buy it.
Insurance and maintenance
Most lenders require the equipment to be insured for its full value, with the lender noted on the policy. Budget for that alongside the repayments. Keep service records too: they protect the resale value, and if you ever want to upgrade or refinance, a well-kept asset is worth more to everyone.
Leasing, hire purchase and chattel loans
Equipment finance comes in a few shapes. With a loan or hire purchase, you own the item at the end and usually claim depreciation and the GST on purchase. With an operating lease, the lender owns the item and you pay to use it, often swapping it for newer gear at the end of the term. Leasing can suit technology that dates quickly, while ownership usually suits vehicles and plant you’ll keep for years. The right choice depends on your tax position, so a quick conversation with your accountant before you sign is worth having.
Tell us what you’re buying
Tell us what the equipment is, the price, whether it’s new or used and who’s selling it. Asking won’t mark your file, your enquiry isn’t passed down a list of lenders, and a real person reads it and calls you back. If you’ve got a quote already, mention it; it makes the first conversation much quicker. Start your enquiry.
Frequently asked questions
Can I finance a used vehicle or machine?
Usually, yes. Lenders set limits on age, condition and kilometres or hours, so have the details ready.
Can I buy from a private seller?
Often. The lender will check the PPSR to make sure there's no existing finance owing on the item before paying the seller.
What happens to GST on the purchase?
If you're GST registered, you can usually claim the GST on the purchase in your return. Talk to your accountant about timing, because the lender may finance the GST-inclusive price.
Is there a balloon payment?
Some agreements include a final lump sum, called a balloon or residual, to lower regular repayments. It must be paid or refinanced at the end, so plan for it.