Key Takeaway
Equipment finance with bad credit in Australia is available through specialist asset lenders who use the equipment itself as security — which often offsets the impact of a poor personal credit score. Rates range from 10–22% depending on credit history, equipment type, and loan term. The highest-leverage strategy is removing any personal defaults that were listed unlawfully under the Privacy Act 1988 first — typically taking 30–90 days — which can shift rates from specialist levels (18–22%) to mainstream (8–12%), saving tens of thousands over a loan term.
Quick Answer: Equipment finance with bad credit in Australia is available through specialist asset lenders who use the equipment itself as security — which often offsets the impact of a poor personal credit score. Rates range from 10–22% depending on credit history, equipment type, and loan term. The highest-leverage strategy is removing any personal defaults that were listed unlawfully under the Privacy Act 1988 first — typically taking 30–90 days — which can shift rates from specialist levels (18–22%) to mainstream (8–12%), saving tens of thousands over a loan term.
Equipment is the lifeblood of most trades and small businesses. A truck, an excavator, a CNC machine, commercial kitchen equipment — without it, you can't work. When bad credit is blocking access to the equipment you need, the business impact is immediate.
The good news is that equipment finance is one of the more accessible finance products for bad credit borrowers, because the asset itself provides security that reduces the lender's exposure. Here's what actually works.
Why Equipment Finance Is More Accessible With Bad Credit
Unlike unsecured personal loans or business loans, equipment finance is secured against the asset being purchased. If you default, the lender repossesses the equipment. This security means lenders take less risk — and as a result, they're often willing to approve applicants with credit file damage that would disqualify them for unsecured finance.
| Finance Type | Security | Bad Credit Approval Likelihood |
|---|---|---|
| Unsecured personal loan | None | Lower — relies heavily on credit score |
| Unsecured business loan | Personal guarantee | Moderate — income-focused |
| Equipment finance | The equipment itself | Higher — asset offsets credit risk |
| Chattel mortgage | The asset | Higher — full ownership at end |
| Finance lease | Lender owns asset during term | Moderate — depends on lender |
The equipment's value, condition, and useful life all affect approval. New equipment and well-established asset categories (trucks, earthmoving, CNC machinery) are viewed more favourably than specialised or rapidly depreciating assets.
Rates: What to Expect With Bad Credit
| Credit Profile | Typical Equipment Finance Rate | Monthly Cost ($80k, 5yr) |
|---|---|---|
| Clean credit (660+ score) | 8–12% | $1,622–$1,778 |
| Minor credit issues (1 default) | 13–17% | $1,836–$1,985 |
| Significant credit issues | 18–24% | $2,032–$2,243 |
| After default removed (clean file) | 8–12% | $1,622–$1,778 |
The difference between 8% and 22% on $80,000 over 5 years is approximately $28,000 in extra interest. Removing a single removable default before applying can shift you from the highest rate tier to the lowest.
Real Case Study: Troy, Mackay — Equipment Finance Unlocked After Default Removal
Troy, 41, ran a small earthmoving business in Queensland. He needed $95,000 in equipment finance for a new excavator to take on a significant contract. Three lenders declined him because of a $710 Ergon Energy default on his Equifax file. His score sat at 468.
He contacted Australian Credit Solutions. We reviewed the Ergon listing. The Section 21D notice had been issued with an amount of $710 — but Troy's records showed the actual arrears at the time of listing were $490. The listed amount was incorrect by $220.
An incorrect default amount is a direct breach of the Credit Reporting Code. We lodged the formal dispute. Ergon acknowledged the error. The listing was removed in 31 days.
Result: Troy's Equifax score moved from 468 to 672. He applied for the equipment finance through a commercial broker. Approved at 9.8% on $95,000. His previous specialist quote had been 21.4% — a saving of approximately $42,000 over the 5-year term. He took the contract, bought the machine, and paid nothing until we succeeded.
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How to Access Equipment Finance With Bad Credit
- Get your personal credit reports from all three bureaus first
- Get a free ACS assessment — identify any removable personal defaults
- If removal viable (30–90 days): pursue it first, then apply at mainstream rates
- If urgent: work with a commercial finance broker who has access to specialist asset lenders
- Prepare documentation: business financials (P&L, balance sheet), bank statements (6 months), tax returns (2 years), and the equipment quote from the supplier
- Apply through one broker — not multiple direct applications
Frequently Asked Questions
Can I get equipment finance with defaults on my credit file in Australia? Yes — specialist asset lenders will approve equipment finance with defaults on the personal credit file, particularly when the equipment provides strong security (e.g. commercial vehicles, earthmoving, CNC). Rates are higher. If the defaults are removable under the Privacy Act 1988, removing them first accesses significantly better rates.
Does the type of equipment affect approval with bad credit? Yes. Lenders are more comfortable financing equipment with clear resale value and established secondary markets — trucks, excavators, forklifts, commercial vehicles. Highly specialised equipment with limited resale value (custom manufacturing equipment, industry-specific machinery) may be harder to finance with bad credit.
How does equipment finance work for sole traders with bad credit? Sole traders are assessed on both personal and business financial grounds. Personal credit defaults affect the application. Equipment finance uses the asset as primary security, which helps offset personal credit concerns. A sole trader with one removable default and strong business revenue often qualifies after the default is addressed.
What's the difference between a chattel mortgage and a finance lease for bad credit borrowers? A chattel mortgage gives you full ownership of the equipment from day one — the loan is secured against it. A finance lease has the lender owning the equipment during the term, with an option to purchase at the end. For bad credit borrowers, chattel mortgages are often preferred because the ownership structure is cleaner for lenders assessing risk.
Can I get equipment finance if I've been bankrupt? Post-bankruptcy, most mainstream lenders require at least 2 years from discharge before considering equipment finance. Specialist lenders may consider applications from discharged bankrupts with strong business revenue and a specific asset as security. The rental/operating lease route can sometimes provide equipment access without a finance approval during this period.
Get Your Credit Assessed First
Before applying for equipment finance, find out whether any personal defaults are removable. The rate difference can be tens of thousands of dollars over a 5-year term.
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Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.
Related reading: Bad credit fix Australia → | Default removal services → | Credit repair Australia →
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