How to refinance equipment finance, and what it costs to get out of 16%

The short version

Yes, you can refinance equipment finance. A new lender pays out your old loan and takes over the security on the same asset. It usually makes sense once your business has the trading history it didn't have when it first borrowed.

Whether it saves you money comes down to one number: the payout figure on your current loan. Get it in writing before you do anything else. Sometimes the right answer is to stay put.

This guide covers chattel mortgages and other business asset finance. For the bigger picture, see our guide to what asset finance is.

What refinancing equipment finance means

When you refinance equipment finance, a new lender pays out your existing loan over the same asset. The new lender then registers its own security interest on the PPSR. That's the government register of who has a claim over an asset. Your old lender's registration comes off once it's paid.

The usual reason is rate. A business that borrowed as a new ABN often paid specialist-lender pricing. Two years later, with tax returns and a clean repayment record, it looks very different to a lender.

This works on finance where your business owns the gear, like a chattel mortgage. Under an operating lease the lender owns it. See chattel mortgage vs operating lease.

A real example: a $220,000 machine on two loans

This example comes from an anonymised public post on r/AusFinance, dated 4 September 2026. It isn't an Aurelius client or deal. We've left out the lender and the location.

A skin clinic bought a $220,000 machine (including GST) when the business was young. The owner put down a $30,000 deposit and financed the rest across two loans:

• $70,000 with a specialist lender at 16% p.a., at $1,894 a month.
• $120,000 through the machine company (vendor finance) at about 7% p.a., at about $1,800 a month.

The vendor balance is now about $109,000. The vendor wants it refinanced and has quoted about $2,500 a month. Add the 16% loan and the clinic is looking at close to $4,400 a month for one machine.

The owner was told not to touch the 16% loan until the two-year mark, because of early payout costs. Replies said to get the written payout figure and ask about one chattel mortgage over the whole machine. Nobody put a number on it. This guide does.

Why 16% happened, and why it can change

A new business has no tax returns and no record of paying a loan. Mainstream asset lenders either price that risk or decline it. Specialist lenders will often say yes at a higher rate. For a new ABN that can be the right call, because it gets the machine working. We cover this in equipment finance for a new ABN.

Two years on, the file can read very differently. Lenders usually want to see:

• Two years of financials or tax returns.
• BAS lodged and up to date.
• Bank statements that show steady trading.
• A clean repayment record on the existing loan.

With those in hand, more lenders will usually look at the deal. That's general lender appetite, not a promise of approval. Our Ford Raptor case study shows how much the order of steps matters for a young business. Our guide to bank vs non-bank lenders explains why many businesses start with a non-bank and refinance later.

On 29 September 2026 the RBA lifted the cash rate by 0.25% to 4.60%, its fourth rise of 2026. An existing chattel mortgage is fixed at settlement, so its rate doesn't change. New quotes do. The next RBA meeting is on 3 November.

The RBA's own numbers show new loans are cheaper than old ones for small business. Its table F7, published 7 September 2026 with data to July, puts the average variable rate on new small-business loans at 7.07% p.a., against 7.41% p.a. on older ones. That's business lending as a whole, not chattel mortgages alone.

Owners are also holding on to cash. Equifax data reported by MPA on 24 September 2026 showed asset finance applications fell 12.7% year on year in August, while business loan demand rose 11.3%.

Step one: get the written payout figure

A payout figure is the exact amount needed to close your loan on a set date. Ask your lender for it in writing. Don't rely on an estimate or a number read out over the phone.

A payout letter usually shows:

• The principal still owing.
• Interest built up since your last repayment.
• Any early termination amount.
• Fees, such as a payout or admin fee.
• The date the figure is good until.

The early termination amount is where loans differ most. Some lenders take off all the interest you haven't been charged yet and add a small fee. money.com.au lists early payout fees of $0 to $450. Other contracts keep part of the future interest. One method quoted in a Whirlpool forum thread on chattel mortgage payouts is a rebate of 50% of the remaining interest. Under that method you still pay half the interest left on the loan.

Your contract sets the method, so the letter is the only number that counts. Some loans lock in most of their interest from day one. Our guide to APR vs simple interest shows how to spot them.

In the clinic's case, ask for two letters: one for the 16% loan and one for the vendor balance.

Step two: check the asset still qualifies

The new lender is lending against the same machine, only older, so it checks the asset again.

• Age. From the deals we see, lenders are keenest on gear that's roughly one to seven years old and still has real resale value. Each lender sets its own limits.
• Type and industry. Clinic and medical gear is well understood by many asset lenders. See our guide to medical equipment finance.
• Paperwork. The lender wants the original tax invoice with the GST-inclusive price, plus the serial number.
• The PPSR. Your current lender's registration has to be released at payout. The new lender will also check nothing else is registered against the machine.

The lender will also compare what the machine is worth now with the amount you want to borrow. If the loans add up to more than the machine's value, it may want a deposit or other security.

Step three: price one chattel mortgage over the whole machine

A chattel mortgage is a business loan where your business owns the asset and the lender holds it as security. For the clinic, a broker would price one chattel mortgage big enough to pay out both loans.

Here are published rate ranges from late September 2026:

These are public ranges, not quotes. All three came out before the 29 September rate rise, so new quotes may be higher. Your rate moves with the asset's age, how long you've traded, your credit file and any deposit or extra security.

Compare the total cost, not just the rate. Our guide to the true cost of a business loan shows how to add it all up.

Stay or break: the numbers

The figures below are illustrative only, not a quote. We've assumed:

• The 16% loan has 36 repayments of $1,894 left. At 16% p.a. that's a balance of about $53,900 and about $14,300 of interest still to come.
• The payout fee is $450.
• The new loan is at 9% p.a. over the same 36 months, with a $500 setup fee added to the loan. We picked 9% because it sits inside the published ranges above. It isn't a rate we're promising.

First, the 16% loan on its own:

With a full rebate, breaking wins. On these assumptions any new rate under about 14.8% p.a. saves money.

With a 50% rebate, staying wins. You still pay half the old interest, which is like paying about 8% on top of the new rate. The new rate would need to be under about 6.3% p.a. just to break even. That's below most of the published ranges. In that case the advice to leave the 16% loan alone was right.

Some contracts charge a break fee that drops after a set point, such as 24 months. If yours does, ask for the payout figure today and at the 24-month date, then run both.

Next, the whole machine. Today the clinic is facing about $4,394 a month: $1,894 on the 16% loan and the vendor's $2,500 quote. Here's one chattel mortgage over both balances, on the same assumptions:

For comparison, staying put costs about $194,300 in total. That's the 16% loan run to the end, plus the vendor's $2,500 a month for about 50 months (assuming the vendor's quote is at about 7%).

The longer loan cuts the monthly bill by about $850 to $1,000. But it costs more in total, and it moves the vendor balance from about 7% to 9%. If cash flow is the problem, that trade can still be worth it. If total cost is the problem, re-rate the dear loan and leave the cheap one alone.

This is general information, not personal financial or credit advice. Every lender calculates payouts its own way, so work from your own letters.

The vendor finance part

Vendor finance is a sales tool. The machine company sells machines, and a $109,000 loan on its books ties up its money. That's why it wants the loan moved to a lender.

The $2,500 quote follows from rate and term. On $109,000 at about 7%, $2,500 a month pays the loan off in roughly 50 months (illustrative). A shorter term means a bigger repayment. Ask the vendor for the rate and term behind the quote, then compare it with other offers.

Lenders treat the vendor balance as a debt when they check you can afford the repayments. It doesn't count as your deposit. Your equity in the machine is its value now, less both balances.

What to send us

To price a deal like the clinic's, we need:

• Both payout letters, in writing and dated.
• The original tax invoice and the serial number.
• Two years of financials or tax returns.
• The last six months of business bank statements.

We're a broker, not a lender, and all finance is subject to lender approval. See how an asset finance broker works, or how we structured $850K for a six-month-old equipment hire business. If your loan has a balloon, read balloon payments explained first.

Talk to us

Send us both payout letters and the asset details. We'll price one chattel mortgage against the machine, or tell you to stay put until the payout figure makes sense. See how our equipment finance and asset finance work, send us the details, or call 1300 094 529.

A quick note: this guide is about equipment used mainly for business. Finance for a business purpose generally sits outside the consumer credit rules in the NCCP. Where those rules apply, so does AFCA. A refinance can change your GST and depreciation position, so check with your accountant before you sign.

Aurelius Capital Group Pty Ltd is Credit Representative 560751 of Viking Money Pty Ltd, Australian Credit Licence 471435 (Viking Aggregation Pty Ltd).

Sources

• Chattel mortgage interest rates (money.com.au, updated 24 September 2026)
• Cash rate target (Reserve Bank of Australia)
• Interest rates, table F7 (Reserve Bank of Australia)
• Equipment loan rates, Q3 2026 (Lyft Money)
• SMEs shifting into survival mode, 24 September 2026 (MPA, citing Equifax data)
• Need advice on equipment finance, 16% interest and repayments are getting too high, 4 September 2026 (r/AusFinance, anonymised public post)