Complete Guide to Equipment Financing in Malaysia 2025

Equipment financing is a loan or lease arrangement that allows businesses to acquire machinery, vehicles, or tools by paying over time instead of upfront cash purchase. In Malaysia, common types include hire purchase (ownership transfers after final payment), leasing (rental with buyout option), and term loans (direct business loan for equipment). You typically pay 10-30% down payment, then monthly installments over 12-60 months at interest rates from 2.88% to 12% per annum depending on your credit profile and equipment type.

Almost all business equipment can be financed: Construction equipment (excavators, bulldozers, cranes, concrete mixers), logistics vehicles (lorries, trucks, prime movers, trailers), warehouse equipment (forklifts, reach stackers, pallet jacks), manufacturing machinery (CNC machines, injection molding, lathes), food equipment (refrigerated trucks, commercial ovens), and office equipment (computers, servers, printers). Both new and used equipment up to 10 years old can be financed. At Ing Heng Credit, we specialize in construction, logistics, and manufacturing equipment financing.

Hire Purchase (HP): You own the equipment after final payment. Monthly payments include principal + interest. Equipment appears on your balance sheet as an asset. You claim capital allowances for tax deduction. Suitable for equipment you plan to keep long-term. Leasing (Operating Lease): You rent the equipment with option to buy at end. Lower monthly payments than HP. Equipment stays off balance sheet. Lease payments are fully tax-deductible as business expenses. Suitable for equipment you may want to upgrade frequently. Capital Lease: Similar to HP but structured as lease. Ownership transfers at end of term. Treated like asset purchase for accounting purposes.

Down payment typically ranges from 10% to 30% of equipment value. Factors affecting down payment: (1) Credit profile - Better credit scores allow lower down payment (10-15%). Poor credit or CCRIS issues may require 20-30%. (2) Equipment age - New equipment: 10-20%. Used equipment (5-10 years old): 20-30%. (3) Equipment type - Common equipment (excavators, forklifts, lorries): 10-20%. Specialized equipment: 20-30%. (4) Loan amount - Smaller loans (below RM100k): may require 20%+. Larger loans (RM500k+): may negotiate to 10%. At Ing Heng Credit, we offer as low as 10% down payment for qualified applicants with 95% approval rate.

Interest rates range from 2.88% to 12% per annum depending on several factors: (1) Lender type - Banks: 4-9% p.a. (stricter approval). Credit companies: 7-12% p.a. (more flexible approval). Captive finance (manufacturer): 3-10% p.a. (limited to specific brands). (2) Credit profile - Excellent credit: 3-6% p.a. Good credit: 6-9% p.a. Fair/poor credit: 9-12% p.a. (3) Equipment factors - New equipment: Lower rates (3-8%). Used equipment: Higher rates (7-12%). (4) Loan term - Shorter term (12-24 months): Lower rates. Longer term (48-60 months): Slightly higher rates. At Ing Heng Credit, competitive rates start from 7.5% p.a. with flexible approval even for bad credit applicants.

Yes, you can finance used equipment! Most lenders in Malaysia accept equipment up to 10 years old. Used equipment financing considerations: (1) Age limits - 0-5 years: Standard terms, 10-20% down payment. 5-10 years: Higher down payment (20-30%), shorter loan term (24-36 months). 10+ years: Case-by-case basis, may require significant down payment. (2) Condition requirements - Must be in good working condition. May require pre-approval inspection. Service history and maintenance records helpful. (3) Brand matters - Reputable brands (Caterpillar, Komatsu, Hitachi, Mercedes, Volvo) easier to finance. Less common brands require higher down payment due to resale value concerns. (4) Interest rates - Typically 1-3% higher than new equipment rates. Ing Heng Credit finances used equipment up to 10 years old with 95% approval rate.

For Individuals/Sole Proprietors: (1) Malaysian IC or Passport (for foreigners with valid work permit). (2) 6 months personal/business bank statements. (3) Income proof: Salary slips, EPF statements, project contracts, payment receipts. (4) Business registration if applicable. For Companies (Sdn Bhd/Enterprise): (1) SSM registration certificate (Form 9/24/49). (2) Company bank statements (6 months). (3) Directors IC copies. (4) Company profile/brochure. (5) Financial statements (optional for companies under 2 years old). (6) Board resolution authorizing equipment purchase. Additional Documents (if applicable): (1) Equipment quotation or invoice. (2) CIDB registration (for construction contractors). (3) Business licenses. (4) Existing loan statements. Processing time: 24 hours from complete document submission at Ing Heng Credit.

Equipment financing offers significant tax advantages in Malaysia: (1) Capital Allowances - Initial Allowance: 20% of equipment cost deductible in first year. Annual Allowance: 14-20% of equipment cost deductible each subsequent year (varies by equipment type). Accelerated Capital Allowance: For certain equipment (automation, green technology), up to 100% deduction in first year. (2) Finance Charges Deductible - Monthly interest payments are tax-deductible business expenses. Reduces taxable income by total interest paid annually. (3) Off-Balance-Sheet Benefits - Operating leases keep equipment off balance sheet. Improves financial ratios (debt-to-equity, ROA) for investor presentations. (4) Cash Flow Timing - Preserve cash for immediate operational needs. Tax deductions spread over equipment useful life match revenue generation. Example: RM300,000 excavator financed. Year 1: Claim RM60,000 (20% initial allowance). Years 2-6: Claim RM42,000 annually (14% annual allowance). Total tax deductions: RM270,000 over 6 years. Consult your tax advisor for specific circumstances.

Approval timeline varies by lender: Traditional Banks: 2-4 weeks. Lengthy documentation requirements. Credit committee approvals. Multiple rounds of verification. Credit Companies (Ing Heng Credit): 24 hours standard approval. 8-12 hours for urgent cases. Streamlined process with minimal bureaucracy. Captive Finance (Manufacturer): 1-2 weeks. Equipment-specific focus. May require additional technical assessments. Factors Affecting Speed: (1) Document completeness - Complete submission: Faster approval. Missing documents: Delays by days/weeks. (2) Credit complexity - Clean credit: Fast approval. CCRIS/CTOS issues: Extra verification time. (3) Loan amount - Smaller loans (below RM100k): Often same-day approval. Large loans (above RM500k): May require senior approval (2-3 days). At Ing Heng Credit, we guarantee 24-hour approval decision from complete document submission. Urgent cases processed within 8-12 hours for contractors with project deadlines.

Yes! Unlike banks that automatically reject bad credit applicants, credit companies like Ing Heng Credit evaluate each case individually. Bad credit considerations: (1) What we look at - Current financial situation (not just past issues). Ongoing business contracts and revenue. Equipment value as collateral. Explanation of past credit problems. (2) Our approach - 95% approval rate including bad credit applicants. Focus on business potential, not just credit score. Equipment serves as primary collateral (reduces our risk). Higher approval rate than banks (50-60% approval). (3) Possible adjustments - Slightly higher down payment (20-30% instead of 10%). Higher interest rate (10-12% instead of 7.5-9%). Shorter loan term (24-36 months instead of 48-60 months). Personal or corporate guarantor may be required. (4) Recent issues - CCRIS record of late payments: Usually accepted if current situation stable. Bankruptcy discharge: Consider after 1-2 years. Active legal cases: May require resolution first. Many of our successful clients had credit issues before working with us. Your equipment financing application will be evaluated fairly based on current circumstances.