Key highlights
- Most equipment finance is fixed for the full term
- Fixed rates lock repayments in for easier budgeting
- Some products offer variable rates that can move
- Your rate is set at settlement, not when you apply
Most equipment finance in Australia is fixed for the entire term, meaning your interest rate and repayment are locked in from settlement to the final payment, regardless of market movements. This predictability is a big reason businesses favour it for budgeting. Some products do offer variable rates, and structures differ, so it pays to confirm what you are signing. Overdrive Machinery Finance compares fixed and variable options across 80+ lenders to suit how you like to manage cash flow.
Why fixed is the norm
The great majority of equipment finance contracts in Australia are written at a fixed rate. Once your deal settles, the interest rate is set for the whole term, and your repayment stays the same from the first instalment to the last. That certainty is the main attraction: you know exactly what leaves the account each month, which makes budgeting and cash-flow planning far simpler for a business. It also means a rise in market rates after you settle will not push your repayment up. The trade-off is that if market rates fall, you do not automatically benefit unless you refinance. For a business trying to forecast cash flow across several years, that certainty is often worth more than the chance of a small saving, which is why fixed remains the default choice for most equipment purchases.
Where variable rates come in
Fixed is common but not universal. Some lenders offer variable-rate equipment finance, and certain facilities, particularly larger or more flexible ones, may carry a rate that moves with the market. With a variable rate, your repayments can rise or fall over the term as the benchmark rate changes. That can work in your favour if rates drop, but it removes the certainty a fixed rate provides. Which suits you depends on how you manage cash flow and your view on where rates are heading, so it is worth asking each lender clearly whether the rate you are quoted is fixed or variable.
The rate is set at settlement
An important detail catches many borrowers out: with a fixed deal, the rate is generally locked when the contract settles, not on the day you apply or receive a quote. If market pricing shifts between your quote and settlement, the final rate can change. This is one reason a quote is indicative rather than a guarantee. As a general guide, rates start from around 6.55% p.a. for strong, asset-backed deals, with lower-doc, older or cheaper assets and weaker credit priced higher, all subject to lender assessment. Moving promptly from quote to settlement reduces the chance of a shift affecting you.
Choosing what suits your business
For most equipment purchases, a fixed rate is the straightforward choice, because it turns your repayment into a known, steady cost you can plan around for the life of the asset. If you value flexibility, expect to pay the finance out early, or hold a strong view that rates will fall, a variable option or a shorter fixed term might suit better. Balloon or residual payments can also shape your repayments within a fixed deal. Weighing these choices against how you run your cash flow is where comparing a range of lenders and structures helps you land the right fit.
Whether a fixed or variable rate suits you depends on your cash flow and plans for the asset. Overdrive Machinery Finance can explain the trade-offs and compare structures across 80+ lenders so your repayment works the way you need. Reach out for a free quote and we will help you choose with confidence.
Frequently Asked Questions
Can my repayment change on a fixed deal?
On a standard fixed-rate contract, the interest rate and scheduled repayment stay the same for the full term. They would only change if you alter the contract, for example by making an early payout or restructuring. Barring that, a fixed deal is designed to give you a steady, predictable repayment throughout.
What happens to my fixed rate if market rates fall?
Your rate stays fixed, so you do not automatically benefit from a fall. You could look at refinancing to capture a lower rate, but early payout costs may apply, so weigh the saving against those costs. A broker can help you work out whether refinancing is worthwhile in your situation.
Is a variable rate riskier?
It carries more uncertainty, because repayments can rise if market rates increase, but it can also fall if rates drop. Whether that risk suits you depends on your cash flow and outlook. Many businesses prefer fixed for the certainty, while some choose variable for flexibility, subject to what each lender offers.
Why did my rate differ from the quote?
Fixed rates are usually locked at settlement, not at quote, so market movement in between can shift the final figure. Changes to the asset, amount or your circumstances can also affect it. This is why quotes are indicative. Settling promptly after quoting reduces the chance of a change catching you out.
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