What Finance Options Work for Dental Equipment?
Dental equipment can represent one of the largest upfront costs involved in establishing, expanding or modernising a dental practice. A new dental chair and delivery system may only be one part of the investment. Practices may also need CBCT or OPG imaging equipment, intraoral scanners, sterilisation equipment, compressors, suction systems, microscopes, CAD/CAM technology and other specialised clinical equipment.
Rather than paying for all of these assets from available cash, equipment finance allows the cost to be spread across an agreed term while the equipment is being used within the practice. Common options include chattel mortgages, hire purchase and supplier or vendor finance. Depending on the lender and equipment, a balloon payment may also be available to reduce the regular repayment.
Consider an Everton Park dentist upgrading two treatment rooms and purchasing a new intraoral scanner. Paying the full cost upfront may reduce cash available for wages, laboratory bills, consumables, marketing and other expenses. Financing the equipment can preserve working capital while providing predictable repayments over the period in which the assets are being used to generate revenue.
The most suitable structure will depend on the equipment, the financial position of the practice, the expected useful life of the assets and how long the dentist expects to retain them.
How Chattel Mortgage Structures Work for Dental Equipment
A chattel mortgage is a common form of equipment finance where the dental practice purchases and generally owns the equipment from the beginning, while the lender takes security over the financed asset until the loan is repaid.
This structure can potentially be used for dental chairs, CBCT and OPG machines, intraoral scanners, microscopes, CAD/CAM equipment, sterilisation systems, compressors, suction equipment and other identifiable business assets. The practice makes regular principal and interest repayments over an agreed term, and depending on the lender and equipment, the facility may include a balloon payment at the end.
For example, a dentist purchasing a $120,000 CBCT system may choose to finance the equipment over five years rather than withdrawing the full purchase price from practice cash reserves. This allows the equipment to be installed and used immediately while the cost is spread over time.
Depending on the lender, the GST component can also be structured separately from the main equipment finance facility. For example, where equipment has a purchase price of $220,000 including GST, the lender may establish a main equipment loan of $200,000 and a separate short-term GST facility of $20,000.
Where the practice is registered for GST and entitled to claim the relevant GST credit, the GST facility can then be repaid when the refund is received through the practice's Business Activity Statement. This can be useful because it allows the practice to avoid using its own working capital to fund the GST upfront and avoids leaving that GST component amortising over the full equipment finance term.
The exact structure will depend on the lender and the practice's circumstances, and not every lender will separate the GST component in this way. It is worth comparing whether the lender offers a dedicated short-term GST facility, whether the GST needs to be repaid within a set period, and whether there are any additional fees attached to that facility.
The finance term should also make sense relative to the expected life of the equipment. Dental chairs may remain in service for many years, while scanners and imaging systems may be upgraded more frequently as newer technology becomes available. The repayment term, balloon and GST structure should therefore be considered together so the finance matches the expected use of the equipment and the practice's cash flow.
Tax and GST treatment should still be confirmed with the practice's accountant before relying on a particular outcome.
When Hire Purchase May Suit a Dental Practice
Hire purchase provides another way of spreading the cost of dental equipment across several years. Under a hire purchase arrangement, the financier generally purchases the equipment and the practice uses it while making agreed repayments, with ownership usually transferring once the required payments and any applicable final amount have been made.
This may suit a practice that wants predictable repayments and intends to retain the equipment for the longer term. A dentist fitting out an additional treatment room, for example, may use hire purchase to fund a dental chair, delivery system and other identifiable clinical assets while retaining cash for the broader costs of the expansion.
The practical differences between hire purchase and a chattel mortgage can include ownership structure, documentation and accounting treatment. Neither option is automatically better for every practice. The right structure depends on the equipment being purchased, practice cash flow, desired loan term and the tax and accounting treatment that applies to the business.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Wealthcove today.
Does Vendor Finance Make Sense for Dental Equipment?
Dental equipment suppliers and manufacturers sometimes offer finance directly as part of the equipment purchase. This can be convenient because the equipment and finance are arranged through the same supplier, and manufacturers may offer promotional rates, deferred repayments or other incentives on particular products.
This is often relevant for higher-value equipment such as imaging systems, scanners and other specialised technology where the supplier is already managing installation, training and servicing.
The supplier's finance should still be compared with alternatives available through banks and specialist equipment lenders. A promotional interest rate does not necessarily mean the overall package is the most competitive once the purchase price, fees, loan term, balloon payment and early repayment conditions are considered.
For example, a dentist purchasing a new CBCT machine may receive finance directly from the equipment supplier. Comparing that offer with independently arranged equipment finance can help determine whether the supplier's package is genuinely competitive or simply convenient.
How Balloon Payments Affect Dental Practice Cash Flow
A balloon payment leaves part of the financed amount outstanding at the end of the loan term. Because less principal is repaid during the regular term, the scheduled repayments are lower than they would be if the full amount were repaid over the same period.
For example, if a practice finances $150,000 of equipment over five years with a 20% balloon, $30,000 remains outstanding at the end of the term. The regular repayments will be lower than they would be with no balloon, but the practice needs a plan for dealing with that final amount.
Depending on the circumstances, the practice may pay the balloon from available cash, refinance the remaining balance or replace the equipment and use sale or trade-in proceeds toward the outstanding amount. Refinancing is subject to approval at that time and should not be assumed when the original facility is established.
The expected value and replacement cycle of the equipment are important. A balloon may make more sense for technology the practice expects to upgrade after several years than for equipment it intends to retain well beyond the finance term.
Financing Several Pieces of Dental Equipment at Once
A dental practice expansion will often involve more than one equipment purchase. A dentist opening an additional treatment room may need a dental chair, delivery system, sterilisation equipment, imaging technology, computers and other clinical assets at the same time.
Depending on the lender and equipment, several eligible assets may be financed together rather than requiring a separate loan for every item. It is important, however, to distinguish equipment from practice fit-out costs. Movable and identifiable assets may suit traditional equipment finance, whereas cabinetry, plumbing, electrical work, flooring and other improvements that become part of the premises may require a different structure.
Where a dental practice is completing both a fit-out and an equipment purchase, separate business loan or commercial loan facilities may be needed for costs that do not fit within equipment finance. Separating the facilities can also help match each loan term to the purpose and useful life of the expense being funded.
What Tax and GST Considerations Apply to Dental Equipment Finance?
Dental equipment used within an income-producing practice will generally have taxation and accounting implications for the business. Depending on the circumstances and finance structure, the practice may potentially be entitled to deductions for the decline in value of eligible equipment and for interest incurred on finance used for business purposes.
For eligible small businesses with aggregated annual turnover of less than $10 million, the instant asset write-off allows an immediate deduction for the business-use portion of eligible depreciating assets costing less than $20,000. From 1 July 2026, the $20,000 threshold has been made permanent and applies on a per-asset basis, meaning an eligible dental practice may be able to immediately deduct multiple qualifying assets where each costs less than $20,000. Assets costing $20,000 or more will generally be added to the small business depreciation pool and depreciated under the simplified depreciation rules.
This can be particularly relevant for lower-cost dental equipment and technology purchased separately, although many larger items such as dental chairs, CBCT machines and other imaging equipment will exceed the $20,000 threshold.
GST credits may also be available to eligible GST-registered businesses where the relevant requirements are satisfied. The timing and treatment can differ depending on the finance structure and the way the equipment is acquired.
Tax concessions and depreciation rules can still depend on the business structure, asset and circumstances. Finance should therefore not be selected solely because of an assumed tax benefit.
Your accountant should confirm the depreciation, GST and deduction treatment that applies to the practice before you rely on those outcomes when choosing between finance options.
How to Compare Lenders for Dental Equipment Finance
Different lenders can have different policies for dental equipment, healthcare professionals, new practices and established businesses. Some banks and specialist lenders have healthcare-specific policies and may take the dentist's profession, qualifications and income profile into account. Others may focus more heavily on the financial performance of the practice and the value of the equipment being financed.
The lender may also consider whether the equipment is new or used, its age and expected useful life, the supplier, the amount being financed and whether the asset has an established resale market.
When comparing offers, look beyond the advertised interest rate. The loan term, repayment, balloon, fees, deposit requirements, early repayment conditions and documentation requirements can all affect the overall suitability of the facility.
This can be particularly relevant when establishing a new dental practice. Some lenders may consider the dentist's professional experience, existing income and projected practice performance where there is limited historical business income, while others may require a longer trading history.
Ready to Review Your Dental Equipment Finance Options?
Whether you're purchasing dental chairs, CBCT equipment, intraoral scanners or other technology for your practice, Wealthcove can compare equipment finance options across banks and specialist lenders based on your circumstances and the equipment you're purchasing.
If you're based in Everton Park or the surrounding area, Liam can meet you in person at your home, workplace or local café at a time that suits you, or you can arrange an appointment by phone or video. Learn more about working with our Everton Park mortgage and finance broker or book an appointment. You can also call Liam directly on 0452 646 192 to discuss your dental equipment finance options.
