4 Factors that impact your equipment finance interest rate

Brendan Pearce

Thursday, 05 March 2020

Whether you’re updating your office with a swanky new fit-out or transporting goods from A-B, you’ll want to do so with minimal costs.

Your equipment finance interest rate is calculated based on a few factors, such as: the amount of money you’re borrowing, your loan structure, credit history, the health of your business, and the economy.

The good news is, there are ways to lower your interest rate and make equipment finance affordable. Here are the top 4 factors that influence your equipment finance interest rate, followed by steps you can take to get yours down.

1. The economy

National interest rates are set by the RBA, and typically increase when the economy is doing well.

While this factor is out of your control, it’s worth noting that interest rates naturally fluctuate with the economy, and this in turn impacts how much you’ll pay.

2. Your credit history

The higher your credit score, the lower your interest rates. A positive credit history shows lenders that you’re capable of managing credit and making repayments on time.

If you have nothing (or little) to show, lenders will also be cautious, and may charge higher interest rates as a result of the uncertainty.

A great way to build your credit history is by demonstrating good financial habits—pay bills on time, only apply for credit you absolutely need, and check up on your credit score before lodging any new applications.

At Valiant, we check your eligibility for finance before starting your application, to keep your credit reputation in tact.

3. How long you’ve been in business

Typically, the older your business is, the lower your interest rates will be. Older businesses are usually more established and therefore considered more trustworthy.

If you’re a new business, it is possible to secure finance, but be prepared to pay more in interest. You may also need to secure your loan with collateral, or a personal guarantee. The good news is, offering some form of security can help to lower interest rates.

4. Your company’s financials

When assessing your application for finance, lenders will want to see a healthy business and in some cases, consistent cash flow. They will look at the following documents to determine the health of your business:

  • Your balance sheets
  • Cash flow statements
  • Bank statements
  • Profit and loss statements.

They may also ask you about your business plan and growth goals. If you’re looking to take out finance or want the option to do so in future, it’s important to stay on top of your business’ health to prove you’re able to successfully run a profitable business. In turn, this will contribute to lower interest rates.

Steps you can take for affordable equipment finance

  • Improve your credit score. Taking out credit, whether for your business or personal use, can increase your credit score and build a positive credit history, provided you’re making repayments on time and in full.

  • Compare lenders and finance options with Valiant. Valiant works with a diverse panel of over 80 Australian lenders, and leverages their relationships to ensure you’re getting a great rate and outcome. We’ll also handle paperwork and assist you throughout the application process—from enquiry through to settlement.

  • Adjust your loan structure. You can lower interest rates by securing your loan with the equipment you’re borrowing. This means that if you default on your loan, your lender will take the equipment you borrowed and use it to recoup any losses incurred. You’ll benefit from lower interest rates and you won’t need to put any of your own assets on the line upfront.

Be confident you’re getting a great rate on equipment finance—don’t sign papers blindly. Let Valiant point you in the right direction, with 100+ years combined experience in the lending industry. Get free finance quotes today, and finally grow your business the way you want.


Brendan is a Senior Product Specialist here at Valiant, specialising in asset finance and equipment loans. He's passionate about helping Aussie business owners secure the resources they need to propel their businesses into new phases of growth.

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