When Does It Make Sense to Finance Tools?

Cash-buying tools is always preferable if you can afford it. But sometimes a job opportunity requires equipment you don't have, or upgrading tools will significantly increase your productivity and earnings. In those cases, tool finance can make sense.

Equipment Finance Options

Chattel Mortgage (for larger equipment)

Best for tools and equipment over $5,000–$10,000. Similar to vehicle finance — you own the equipment immediately, can claim depreciation and interest.

Equipment Line of Credit

A pre-approved credit facility you can draw on as needed to buy tools and equipment. Good flexibility for tradies who regularly invest in equipment.

Personal Loan

For smaller tool purchases, a personal loan might be simpler. Less tax benefit but quicker to arrange.

Buy Now Pay Later (Business)

Some BNPL providers now offer business versions. Good for smaller purchases but watch the fees — they add up.

Trade Credit from Suppliers

Many tool suppliers offer trade accounts with 30–60 day payment terms. This is essentially free short-term finance if you pay on time. Always worth asking your supplier.

The Instant Asset Write-Off Opportunity

Check the current ATO instant asset write-off thresholds. If eligible, you may be able to deduct the full cost of tools in the year of purchase rather than depreciating them — making the real cost significantly lower when you factor in the tax saving.

Before You Finance

  • Will this equipment generate more income than the loan costs?
  • Could you buy second-hand and pay cash instead?
  • Have you checked if you can rent the equipment for a one-off job?
  • What happens if the equipment breaks down — does the finance include warranty?