Most tradies who finance a machine, a trailer of tools or a fit-out do it through a broker, and most of them could not tell you exactly what the broker did or how the broker got paid. That is not their fault. The industry has never been especially clear about it. This page sets out what an equipment finance broker actually does, how brokers are paid, what “our panel” means, when going direct to a lender makes more sense, and the questions worth asking before you let anyone submit an application in your business’s name.
If you are here for the finance itself rather than the how-brokers-work part, our equipment finance page covers structures, what you will need and how to apply.
What an equipment finance broker does
A broker is a credit assistance provider. That is the legal description and it is a fair plain-English one too: the broker does not lend the money. A lender does. The broker’s job sits between you and the lender and has four parts.
- Working out what you are actually trying to do. Buy a new excavator or a used one, from a dealer or a private seller, on a chattel mortgage, a hire purchase or a lease, over what term, with or without a balloon. A decent broker spends more time here than anywhere else, because the structure decides most of what follows.
- Matching that to lenders who will write it. Lenders differ on the assets they will fund, the age of the asset, private-sale purchases, how long an ABN needs to have been active, how much documentation they want and how they treat prior credit issues. A broker who does this all day knows which lender’s box your deal fits without submitting it to five of them and collecting five credit enquiries.
- Preparing and lodging the application. Gathering the documents, presenting the deal the way the lender’s credit team wants to see it, and handling the back-and-forth until it is approved and settled. For a low-doc application this presentation work is a large part of the value.
- Getting it settled. Invoices, insurance certificates, PPSR checks on used gear, supplier payments and the timing so the machine turns up when the job starts.
What a broker does not do is guarantee an approval, set the lender’s rate or decide the lender’s policy. Anyone telling you otherwise is selling.
How equipment finance brokers get paid
This is the part that is rarely explained, so here is how it works at Tradie Finance, as set out in the Five Tees Pty Ltd Credit Guide. Tradie Finance is a trading name of Five Tees Pty Ltd, so that document is the one that governs how we are paid. Other brokers may be paid differently; the point is that you are entitled to ask any broker the same questions and get a straight answer.
- An origination fee, only if the loan settles. We may charge an origination fee for arranging the finance, up to but often less than $2,500 including GST. It is payable only if the loan settles, is usually added to the loan and paid to us from the loan proceeds, and if the loan does not settle no fee is payable.
- An upfront commission from the lender. If the loan settles, the lender usually pays the broker a commission calculated as a percentage of the amount financed. On commercial and ABN loans that is typically in the range of about 1% to 4%, depending on the lender, the product and the term. The exact figure is disclosed to you in writing before you proceed.
- No trail. We do not receive ongoing or trail commissions on the loans we arrange.
- Possible volume-based payments from our aggregator, which depend on the total volume of loans written with some lenders over a period. These are not paid by you and do not change the fee you are charged, but they can influence which lenders sit on a panel, which is why the next section matters.
- Referral payments. If a dealer or another introducer referred you to us, we may pay them a share of our commission. That is not an additional cost to you, and you can ask us to tell you in writing how a referrer was paid.
Two practical consequences. First, because commission is a percentage of the amount financed, a broker’s income rises with the size of the loan; a good broker will still tell you to borrow less if that is the right answer, and it is fair to notice whether yours does. Second, because the origination fee is usually capitalised into the loan, you are paying interest on it over the term. Ask what the fee is, whether it can be paid upfront instead, and what it costs you either way.
What “our panel of lenders” actually means
Every broker will tell you they have access to a panel. What that means is that the broker has accreditation with a set of lenders and can submit applications to them. It does not mean the broker compares every lender in Australia. Our own Credit Guide puts it directly: we source loans from a panel of lenders, not from all lenders in the market, and there may be other products available that we do not consider or recommend.
That is not a weakness of broking; it is the nature of it. But it means you should ask any broker which lenders they are accredited with, whether they are paid differently by different lenders on the panel, and why they are recommending the one they are recommending. A broker who will not answer the second question is telling you something.
Consumer credit rules and business equipment finance
A point that causes real confusion. Australia’s consumer credit regime, the National Credit Code and the responsible lending obligations that come with it, applies where credit is provided predominantly for personal, domestic or household purposes. An excavator, a ute financed through the business or a commercial kitchen fit-out is generally business-purpose credit, and those particular consumer obligations generally do not apply to it.
That does not mean business equipment finance is unregulated or that anything goes. A broker holding an Australian Credit Licence is required to act honestly, efficiently and fairly under that licence across all of its credit activities, and the licence, the fee disclosure and the complaints process still stand behind a business deal. What changes is the formal suitability assessment: on a consumer loan the broker must make a preliminary assessment that the loan is not unsuitable for you; on a business loan you are treated as the one who knows whether the machine will pay for itself. If a broker starts a business application by asking you to sign a consumer-style suitability form, or a consumer application without one, ask why.
Tradie Finance is a trading name of Five Tees Pty Ltd, which holds Australian Credit Licence 506065. That is the licence that stands behind every application we lodge, business or consumer.
Broker or direct: when each makes sense
| Through a broker | Direct to a lender | |
|---|---|---|
| Choice of lender | A panel; the broker picks the fit | One lender’s products only |
| Who structures the deal | The broker, with you | You, with that lender’s staff |
| Credit enquiries | Ideally one, to the right lender | One per lender you approach |
| Low-doc or unusual assets | Where brokers add most value | Depends entirely on that lender’s appetite |
| Cost to you | Possible origination fee; lender pays commission | No broker fee; the lender’s own fees still apply |
| Speed | Fast if the broker knows the lender’s box | Fast if your deal is plain and you already bank there |
| Best suited to | First equipment purchase, used or private-sale gear, newer ABNs, mixed credit history, anyone who wants it handled | Established business with an existing lender relationship buying a standard new asset |
Going direct is a perfectly good choice for a business that has banked with the same lender for years, is buying a new asset from a dealer and does not mind doing the legwork. A broker earns their keep where the deal is not plain: an older machine, a private seller, an ABN under two years, a tax debt, a mix of assets, or a tradie who simply does not have the hours to run three applications while running a business.
Questions to ask any equipment finance broker
- Which Australian Credit Licence do you operate under, and in whose name?
- Which lenders are you accredited with for this type of asset?
- What will I pay you, when, and is it added to the loan?
- What will the lender pay you on this deal, and is it different for different lenders on your panel?
- Why this lender and this structure for my deal?
- How many credit enquiries will this involve?
- What happens if the deal does not settle?
- Can I see the disclosure documents before you submit anything?
A broker who answers all eight without flinching is one you can work with.
How the structures fit in
The broker’s recommendation will usually land on one of three structures. A chattel mortgage, where the business owns the asset from day one and the lender holds security over it; a commercial hire purchase, where ownership transfers at the end; or a lease, covered in equipment leasing. How the three compare is set out in chattel mortgage vs lease vs hire purchase, and what equipment finance tends to cost, and why, is in equipment finance rates and costs. Tax treatment differs between them and is a question for your accountant, not your broker.
To see what a given amount and term looks like in repayments before you talk to anyone, the equipment finance calculator will do that with a rate you enter.
Frequently asked questions
What does an equipment finance broker do?
A broker is a credit assistance provider. They work out what you are trying to finance and how, match the deal to lenders on their panel who will write it, prepare and lodge the application and manage it through to settlement. They do not lend the money themselves and cannot guarantee an approval or set a lender’s rate.
How much does an equipment finance broker cost?
It varies by broker. At Tradie Finance we may charge an origination fee of up to, and often less than, $2,500 including GST, payable only if the loan settles and usually added to the loan. The lender also pays us an upfront commission, typically about 1% to 4% of the amount financed on commercial loans. Both are disclosed to you in writing before you proceed.
Do equipment finance brokers get commission from lenders?
Generally yes. The lender pays an upfront commission calculated as a percentage of the amount financed if the loan settles. Some brokers also receive trail commissions; Tradie Finance does not. Brokers may also receive volume-based payments from their aggregator, which are not charged to you but can influence which lenders sit on a panel.
Is it better to use a broker or go direct for equipment finance?
Direct suits an established business with an existing lender relationship buying a standard new asset. A broker adds most value where the deal is less plain: used or private-sale equipment, a newer ABN, a low-doc application, prior credit issues, or a business owner without the time to run several applications. Neither is universally cheaper.
Does the National Credit Code apply to equipment finance?
Generally not where the credit is predominantly for business purposes. The National Credit Code and its responsible lending obligations apply to credit predominantly for personal, domestic or household purposes. A licensed broker still has to act honestly, efficiently and fairly under its Australian Credit Licence on business deals, and fee disclosure and complaints processes still apply.
Will using a broker affect my credit file?
Every application lodged with a lender is a credit enquiry. A broker who knows which lender fits your deal should need to lodge once. Ask how many enquiries the broker expects to make before they submit anything, and ask them not to shop the deal around without telling you.
What should I check before signing with a broker?
That they hold or operate under an Australian Credit Licence and in whose name; which lenders they are accredited with; what you will pay and when; what the lender pays them; why they are recommending a particular lender and structure; and that you have seen the disclosure documents before anything is submitted.
Want it handled by people who do this every day?
Tradie Finance is built for tradies, but we finance everyone. Tell us what you are buying and we will tell you straight how we would structure it, which lenders we would go to and what it will cost you to use us.
Apply online or request a callback.
Written and reviewed by the Finance Director at Tradie Finance.
This article is general information only and does not constitute credit, financial or tax advice. It does not take your objectives, financial situation or needs into account; consider whether a product is appropriate for your circumstances. Tradie Finance is a trading name of Five Tees Pty Ltd, Australian Credit Licence 506065. Fee and commission descriptions reflect our current Credit Guide, which prevails if there is any inconsistency. Lending is subject to approval, lending criteria, terms, conditions and fees.