Do You Need a Deposit for Equipment Finance?

Not always. Some providers may consider funding a high proportion of an eligible asset's price, while others require a deposit or contribution. There is no universal policy for a deposit, no-deposit funding or '100% finance'. The provider may also treat GST, delivery, registration, fees and insurance differently from the equipment price.

A deposit reduces the amount financed but uses business cash. The right comparison is not simply 'deposit or no deposit'; it is the effect on total cost, repayments, working capital, emergency reserves and the asset's expected contribution to the business.

Asset: a new, readily valued item may be treated differently from old, specialised, imported, modified or private-sale equipment. The provider may assess its value, resale market, condition and useful life.

Applicant: trading history, income stability, existing commitments, credit conduct, entity structure and the quality of financial evidence can affect what a provider is prepared to consider. New-business and self-employed applications may have different evidence requirements.

Structure: a secured loan, chattel mortgage, finance lease or other facility can have different upfront and end-of-term mechanics. A lower initial contribution may come with a higher financed amount, a residual or additional fees.

Transaction: the supplier, invoice, GST treatment, delivery, insurance, asset location and settlement method can all matter. Provider criteria, not an online calculator, determines the result.

A larger deposit usually means less is financed, which can reduce regular repayments and interest charged on the financed amount. It also removes cash that could otherwise cover wages, stock, tax, repairs, insurance or a slow trading month. A smaller contribution preserves cash but can increase repayments and the amount exposed if the asset is sold for less than the debt.

Keep a separate list of upfront costs: deposit or contribution, establishment fee, settlement fee, delivery, site preparation, attachments, registration or government charges where relevant, insurance, inspection, legal review and any supplier deposit. Ask which items can be financed and whether doing so changes the amount, fees or terms.

For a $120,000 machine, a $20,000 contribution would leave $100,000 before any financed fees. A different structure with no contribution might finance a greater amount, potentially producing higher repayments and more interest. A third option could use a final $30,000 residual to reduce scheduled repayments while leaving a large amount to manage at the end.

These figures demonstrate arithmetic, not available products or approval. Compare the total amount payable, cash retained, regular repayment, final payment and consequences of a slow season. A repayment that looks manageable in a calculator may not be manageable after fuel, maintenance, wages and tax obligations.

Cash can be operationally valuable for a seasonal contractor, a business waiting on progress payments, a farm facing variable conditions or a service business carrying payroll between invoices. It can also be valuable as a repair and downtime reserve. The value of liquidity should be tested against the extra cost and risk of a smaller contribution.

Conversely, using nearly all available cash for a deposit can leave a business unable to meet ordinary commitments. A provider's willingness to fund a high proportion does not establish that the structure suits the business. Prepare a cash-flow forecast that includes a weak month and an unexpected repair.

Ask: What is the exact amount financed? Are fees, GST, delivery or attachments included? Is the rate fixed or variable? What is the total amount payable? Is there a balloon or residual? What insurance is required? How is early payout calculated? What happens if the asset is sold, damaged or replaced? Is a guarantee or additional security required?

Also ask what happens if the supplier cannot deliver on time or the asset does not meet the description. Keep the quote, finance documents and supplier contract aligned. Do not treat a pre-assessment or indicative figure as a final commitment.

Before deciding, write down the asset price and all upfront costs; cash available after settlement; minimum operating reserve; expected monthly repayment; seasonal revenue pattern; maintenance and insurance budget; likely resale or replacement plan; and any final balloon or residual.

Obtain written comparisons rather than comparing only an advertised percentage or weekly figure. A professional may explain provider options, but the applicant should confirm assumptions and obtain accounting or legal advice where the structure has tax, ownership or security implications.

Can a deposit be borrowed from another facility? Some providers may allow funds from another source, subject to disclosure and their criteria. That does not remove the repayment obligation and may affect serviceability.

Does a deposit guarantee approval? No. A deposit can change the amount requested, but approval, pricing, terms and timing remain provider-dependent.

Is no-deposit equipment finance always more expensive? Not always, and no universal comparison can be made. A higher financed amount, fees, rate, term and residual all need to be considered.

Does Asset Connect set deposit requirements? No. Asset Connect Australia does not set products or terms and does not approve or arrange finance. Where appropriate, an enquiry may be connected with an independent professional who can explain a provider's criteria.