Equipment finance is a loan secured against the vehicle or machinery you're buying, not against your home. For established businesses it can be quick to arrange: some lenders offer streamlined, low-documentation approvals for vehicles and small equipment when the business has held an ABN and been GST-registered for about two years, the owner owns property and there's a clean credit history.

In this video, McKern mortgage broker Mark Jones explains how vehicle and equipment finance works, from cars and light commercial vehicles up to excavators and bobcats. He covers what happens if you default: the lender repossesses and sells the asset first, but because business borrowers usually give a personal guarantee, any shortfall is still owed. Lenders will normally agree a payment arrangement, but a repossession goes on your credit report and affects future borrowing.

In this video

0:00 How vehicle and equipment finance works

1:51 Is my home at risk if I default?

2:32 Payment arrangements for a shortfall

3:16 Impact on your credit report

General information only, not personal advice.