Understanding asset & equipment finance LVRs before you buy

When it comes to asset finance, one of the first questions we’re asked is:

“How much deposit do I need?”

The short answer: it depends.
The longer (and more useful) answer relates to LVRs — and how the deal is structured.

That’s where Finance New Zealand’s experienced asset finance brokers make a real difference.

What LVR's mean in asset & equipment finance lending

LVR (Loan-to-Value Ratio) refers to the percentage of an asset’s value that a lender is prepared to fund.

For example:

• 100% LVR means no upfront deposit is required
• 80% LVR means a 20% deposit is required
• In most cases, lenders will also fund GST, usually for 3 months to enable the GST portion of the asset purchase to be reclaimed from IRD.

LVR's vary depending on the lender, the asset, and the strength of the business.

Typical asset finance LVR ranges in New Zealand

While every application is assessed on its own merits, the following ranges provide a general guide:

• Plant & machinery finance: 80–100%
• Equipment finance (general): 80–100%
• Trucks & transport equipment: 70–100%
• Commercial and business vehicles: 80–100%
• Forestry, quarry, and mining equipment: 60–90%
• Medical, dental, and specialist equipment: 90–100%

New or late-model assets with strong resale value generally attract higher LVRs and more competitive pricing.

Why LVRs vary — even for the same asset

Two businesses purchasing the same piece of equipment can receive very different finance outcomes.

That’s because lenders assess risk, not just the asset.

They consider:

• The asset – age, condition, resale value, and expected working life
• The business – time trading, cashflow, profitability, and credit profile
• The structure – loan term, residuals, and how GST is treated

This is why working with a Finance New Zealand asset finance broker, rather than approaching a single lender, often leads to a better result.

The role of valuations in asset finance

In some situations, lenders will rely on a formal valuation or internal assessed value, rather than the purchase price, when determining the LVR.

This is more common for:

• Used or older equipment
• Specialised or niche assets
• Business to business, i.e not via a dealer or equipment supplier
• Higher-LVR or longer-term requests

If a valuation comes in below the purchase price, the lender’s LVR is calculated against the lower value, which can increase the required deposit unless the deal is structured appropriately or placed with the right lender.

Understanding when valuations are required — and how different lenders approach them — plays an important role in achieving the right outcome.

Banks vs specialist asset finance lenders

Banks typically:

• Apply more conservative LVR limits
• Prefer newer or lower-risk assets
• Require stronger balance sheets
• This more conservative lending approach can be offset with the benefits of more flexible lending facilities and lower interest rates

Specialist asset finance lenders often:

• Offer greater flexibility on LVRs
• Are more comfortable with niche or industry-specific equipment
• Structure deals around cashflow rather than rigid policy
• This more aggressive lending approach can be offset by slightly higher interest rates, and less product flexibility

By working with 40+ lenders, including banks and specialist funders, Finance New Zealand is able to create competitive tension and tailor finance solutions to each client.

Why structure matters as much as LVR

In many cases, improving affordability isn’t about pushing for the highest possible LVR — it’s about structuring the finance correctly.

This can include:

• Funding GST upfront or using a GST balloon
• Matching loan terms to the asset’s useful life
• Using residuals instead of cash deposits
• Preserving working capital for growth

The right structure protects cashflow and supports long-term business performance.

Examples of assets we’ve funded at up to 100% across different industries include:

• 2021 New Holland tractor – funded at 100% for an agricultural contracting business
• 2020 Caterpillar excavator – funded at 100% for a plumbing and gas services business
• New Scania oil tanker truck unit funded for an oil distribution business
• Late-model second-hand log truck funded for a forestry contracting business
• Agricultural drone, $50,000 funded at 100% using vehicle collateral for an agricultural contracting business
• Freightliner refrigerated curtainsider and trailer – funded at 100% to for horticulture business with seasonal loan repayments aligned to harvest periods.

The Finance New Zealand approach

At Finance New Zealand, we don’t believe in one-size-fits-all solutions.

Our asset finance brokers:

• Assess the asset, the business, and the broader strategy
• Compare options across banks and specialist lenders
• Structure asset and equipment finance to support cashflow and growth

If you’re considering purchasing vehicles, machinery, or equipment, it pays to understand your options before committing.

Talk to a Finance New Zealand asset finance broker before you buy.