For many Australian businesses, buying brand-new equipment simply doesn’t make financial sense. A three-year-old excavator that’s been well maintained can perform just as effectively as a new one, at half the price. A used CNC machine with low hours can deliver the same precision as a factory-fresh model. And a second-hand delivery truck with a solid service history can keep your logistics running smoothly without the new-vehicle premium.
Used equipment finance allows Australian businesses to fund the purchase of pre-owned machinery, vehicles and commercial assets through structured lending products. Rather than paying the full purchase price upfront or stretching your cash flow thin, you can spread the cost over a manageable term while putting the asset to work immediately.
At Mortgage & Finance Advisory, we’ve helped hundreds of businesses across Geelong, the Surf Coast, Melbourne and regional Victoria finance used equipment purchases. Whether you’re a tradie buying a second-hand ute, a manufacturer investing in pre-owned production equipment, or a farmer acquiring used agricultural machinery, we understand how to structure finance that works for your situation.
The decision between new and used equipment often comes down to value rather than quality. Modern machinery and vehicles are built to last, and a well-maintained used asset can deliver years of reliable service at a fraction of the new cost. Here’s why so many Australian businesses choose the used route.
New equipment loses a substantial portion of its value the moment it leaves the dealership or factory floor. Heavy machinery can depreciate 20-30% in the first year alone, while commercial vehicles often lose 15-25% of their value within twelve months. By purchasing used, you’re letting someone else absorb that initial depreciation hit while acquiring an asset that still has plenty of productive life remaining.
While interest rates on used equipment finance may be slightly higher than new equipment rates, the total amount you’re borrowing is significantly less. A $120,000 used excavator at 7.5% interest will cost you far less in total repayments than a $200,000 new excavator at 6.5%. The maths almost always favours used equipment when you look at total cost of ownership over the finance term.
With a lower purchase price and correspondingly lower repayments, used equipment reaches its break-even point much faster than new. This means you’re generating pure profit from the asset sooner, which is particularly important for businesses managing tight margins or seasonal cash flows.
A used asset with a documented service history gives you something new equipment can’t: a proven track record. You can research known issues, check reliability data, and in many cases speak with previous owners about real-world performance. This removes much of the uncertainty that comes with first-generation models or newly released equipment.
Australian lenders offer used equipment finance across a broad range of asset categories. The key factors that determine eligibility are the asset’s age, condition, remaining useful life, and how easily it can be resold if needed.
| Asset Category | Typical Max Age Financed | Common Examples |
|---|---|---|
| Construction & Earthmoving | 15 years | Excavators, loaders, dozers, graders, rollers |
| Commercial Vehicles | 10 years | Trucks, vans, utes, tippers, refrigerated vehicles |
| Agricultural Machinery | 15 years | Tractors, harvesters, sprayers, seeders, balers |
| Manufacturing Equipment | 12 years | CNC machines, lathes, presses, welders, robots |
| Medical & Dental | 8 years | Imaging systems, dental chairs, diagnostic equipment |
| IT & Technology | 5 years | Servers, networking gear, point-of-sale systems |
| Hospitality & Catering | 10 years | Commercial ovens, coolrooms, dishwashers, coffee machines |
| Transport & Logistics | 12 years | Forklifts, trailers, cranes, container handling |
Several lending products are available for used equipment purchases in Australia. The best option depends on your business structure, tax position, cash flow requirements and how you plan to use the asset.
A chattel mortgage is the most popular finance structure for used equipment. You take ownership of the asset from day one while the lender holds a mortgage over it as security. This structure allows you to claim GST credits on the purchase price upfront (rather than on each repayment), claim interest costs as a tax deduction, and depreciate the asset for tax purposes. Chattel mortgages work well for businesses registered for GST and those wanting to maximise tax benefits.
Under a finance lease, the lender purchases the asset and leases it to you for a set term. You have full use of the equipment but don’t technically own it during the lease period. At the end of the term, you typically have the option to purchase the asset for a predetermined residual value, extend the lease, or return the equipment. Lease payments are generally tax-deductible as an operating expense.
Hire purchase is similar to a chattel mortgage but with a slightly different legal structure. You hire the equipment with the option to purchase it at the end of the agreement (usually for a nominal amount). Ownership transfers once the final payment is made. This can be a good option for businesses not registered for GST or those who prefer a simple payment structure.
Some lenders offer rent-to-own arrangements for used equipment, particularly for businesses that want lower initial payments or those with less established credit histories. While this option typically costs more overall, it provides flexibility and lower barriers to entry for newer businesses looking to acquire quality used assets.
Interest rates for used equipment finance are influenced by several factors. Understanding these can help you secure the best possible rate for your situation.
| Factor | Impact on Rate | What Lenders Look For |
|---|---|---|
| Asset Age | Higher rate for older assets | Remaining useful life exceeds loan term |
| Asset Condition | Better condition = lower rate | Service records, inspection reports, hours/km |
| Loan-to-Value Ratio | Higher LVR = higher rate | Independent valuation, market comparables |
| Business Credit Profile | Stronger profile = lower rate | Credit history, trading history, financials |
| Deposit Amount | Larger deposit = lower rate | 10-20% deposit shows commitment |
| Seller Type | Dealer = potentially lower rate | Licensed dealer vs private sale documentation |
As a general guide, used equipment finance rates in Australia typically range from 5.5% to 12%, depending on the factors above. Businesses with strong credit profiles purchasing relatively recent equipment from licensed dealers will sit at the lower end, while older assets or less established businesses may see rates toward the higher end.
Getting approved for used equipment finance follows a similar process to new equipment finance, with a few additional considerations around the asset’s age and condition.
Before approaching a lender, identify the specific used asset you want to purchase. Research fair market values using platforms like Machines4U, TradeFarmMachinery, or dealer networks. Knowing the realistic market value helps ensure you’re paying a fair price and gives your broker leverage when negotiating finance terms.
Prepare your application with the standard business finance documents plus additional information specific to the used asset. You’ll typically need your last two years of business tax returns and financial statements, six months of business bank statements, details of the asset including make, model, year, serial number and asking price, the seller’s details (dealer or private), and any available service history or inspection reports.
For higher-value used assets, consider getting an independent pre-purchase inspection. This serves two purposes. It protects you from buying equipment with hidden problems, and it demonstrates to the lender that the asset is in good condition with genuine remaining useful life. Many lenders will require an independent valuation for used assets above certain thresholds.
Work with your finance broker to submit applications to lenders who specialise in used equipment. Lenders differ on used assets. Some have conservative age limits while others are more flexible, particularly for well-maintained equipment with strong resale markets. A broker with deep lender relationships can match you with the right lender for your specific asset.
Once approved, settlement typically happens within 24-72 hours. The lender pays the seller directly, and you arrange collection or delivery of the equipment. Ensure all ownership transfer documentation is completed properly, particularly for registered assets like vehicles and trailers.
A Geelong-based landscaping business approached us looking to expand their fleet. Instead of purchasing a new $185,000 Caterpillar excavator, we helped them finance a well-maintained 4-year-old model with 3,200 hours for $98,000. With a chattel mortgage at 6.9% over 5 years, their monthly repayments were $1,938, compared to $3,661 for the new machine. The used excavator had a full dealer service history and came with a 12-month drivetrain warranty. The $87,000 they saved on the purchase allowed them to also finance a used skid steer and trailer, significantly expanding their capabilities.
Purchasing used equipment can deliver significant tax advantages for Australian businesses, similar to those available for new equipment purchases.
Used equipment can be depreciated for tax purposes based on its effective life as determined by the ATO. Importantly, the ATO publishes effective life estimates for assets based on the asset type, not its actual age at purchase. This means you may be able to claim substantial depreciation deductions even on older equipment, reducing your taxable income and improving cash flow.
Eligible small and medium businesses may be able to immediately deduct the full cost of used equipment purchases under the instant asset write-off provisions. The thresholds and eligibility criteria change periodically, so it’s essential to check current rules with your accountant. When available, this can dramatically reduce the effective cost of your used equipment purchase.
If you’re registered for GST and purchase used equipment through a chattel mortgage, you can claim the GST component of the purchase price as an input tax credit on your next BAS. This provides an immediate cash flow benefit that effectively reduces the purchase price by around 9% for GST-registered businesses.
The interest component of your finance repayments is tax-deductible as a business expense, regardless of whether you’ve used a chattel mortgage, finance lease or hire purchase arrangement. This further reduces the effective cost of financing used equipment.
Smart purchasing decisions can save you thousands and help ensure your financed asset performs reliably throughout the loan term and beyond. Here’s what experienced buyers look for.
Always check service records. A complete service history is valuable. Regular maintenance intervals that match manufacturer specifications indicate the equipment has been properly cared for. Gaps in service records should raise red flags.
Verify hours and usage. For machinery, hours of operation tell you more than age alone. A five-year-old excavator with 2,000 hours has significantly more life remaining than one with 8,000 hours. Similarly, for vehicles, kilometres matter more than age. Cross-reference odometer readings with service records to check for consistency.
Buy from reputable sources. Licensed dealers, equipment auction houses and certified pre-owned programs offer greater peace of mind than private sales. Many dealers provide short-term warranties on used equipment, and their reputation depends on selling quality stock. Lenders also generally prefer dealer purchases over private sales.
Research market values thoroughly. Check multiple platforms and dealers to understand the fair market range for the specific make, model and year you’re considering. Being able to demonstrate fair market value to your lender strengthens your finance application.
Consider total cost of ownership. Factor in potential maintenance costs, parts availability and fuel efficiency when comparing used options. An older machine might be cheaper to purchase but more expensive to run. Conversely, some older models are renowned for reliability and have abundant, affordable parts.
Get a pre-purchase inspection. For any asset worth more than $20,000, investing $300-$800 in an independent inspection is smart insurance. A qualified inspector can identify hidden issues like structural cracks, hydraulic problems, or engine wear that aren’t visible during a standard walk-around.
Where you buy your used equipment can significantly impact your finance options and the terms you’re offered.
| Consideration | Licensed Dealer | Private Sale |
|---|---|---|
| Lender Acceptance | Widely accepted by all lenders | Some lenders won’t finance private sales |
| Valuation | Dealer invoice accepted as value proof | Independent valuation usually required |
| GST | GST included, claim input credit | Usually no GST (private sale) |
| Warranty | Often includes limited warranty | No warranty (sold as-is) |
| Interest Rate | Generally lower rates available | May attract higher rates |
| PPSR Check | Dealer handles encumbrance checks | You must conduct PPSR search yourself |
Having helped many Victorian businesses finance used equipment, we’ve seen certain mistakes come up repeatedly. Here’s what to watch out for.
Not checking the PPSR. The Personal Property Securities Register reveals whether an asset has existing finance owing against it. If you buy equipment with an existing encumbrance, you could lose the asset to the original lender. Always conduct a PPSR search before committing to a purchase. It costs around $3.40 per search and takes minutes.
Overestimating remaining useful life. Be realistic about how long the equipment will continue performing at an acceptable level. If you’re financing a used asset over five years, it needs to be capable of productive work for at least that duration. Financing older equipment over extended terms can leave you with an asset that’s costing money to maintain while you’re still paying it off.
Ignoring total cost of ownership. The purchase price is just the beginning. Older equipment typically has higher fuel consumption, more frequent maintenance requirements, and potentially more expensive parts. Factor these ongoing costs into your decision, especially when comparing used vs slightly newer alternatives.
Skipping the inspection. Saving a few hundred dollars by not getting a pre-purchase inspection can cost you thousands in unexpected repairs. This is particularly important for private sale purchases where there’s no dealer warranty to fall back on.
Not shopping around for finance. Different lenders have vastly different appetites for used equipment. Some specialise in newer assets and penalise older equipment with high rates or low LVRs, while others actively seek used asset business and offer competitive terms. A specialist broker can identify the best lender for your specific situation.
This depends on the asset type and lender. Heavy machinery and agricultural equipment can typically be financed up to 15 years old, commercial vehicles up to 10 years, and technology equipment up to 5 years. Some specialist lenders will consider older assets if they’re in excellent condition with documented service histories and strong resale markets.
Yes, many lenders will finance private sale purchases, although the process may require additional steps such as an independent valuation and PPSR check. Interest rates for private sale purchases may be slightly higher than dealer purchases. Your broker can identify lenders who are comfortable with private sale transactions.
Not always, but providing a deposit of 10-20% can help you secure better interest rates and improve your chances of approval. For older assets or applicants with less established credit histories, a deposit may be required by the lender to manage their risk exposure.
Yes. Used equipment purchases are eligible for the same tax deductions as new equipment, including depreciation, interest deductions, and potentially the instant asset write-off. The specific deductions available depend on your business structure, turnover and the current tax rules. Always consult your accountant for advice specific to your situation.
For simple applications with complete documentation, approval can come through in 24-48 hours. More complex applications involving older assets, larger amounts or businesses with less established histories may take 3-5 business days. Having your documentation prepared and a pre-purchase inspection report ready can speed up the process significantly.
You’re still responsible for making repayments regardless of whether the equipment is operational. This is why pre-purchase inspections and buying from reputable sources are so important. Consider equipment breakdown insurance for high-value used assets, particularly those without manufacturer warranties. Some lenders can bundle insurance into the finance package.
Our Geelong-based team specialises in used equipment finance across all industries. Get expert advice and competitive rates tailored to your situation.
Or call us on 03 9020 2699
About the Author
Melanie McNaughton is the founder of Mortgage & Finance Advisory, based in Geelong, Victoria. With extensive experience in equipment and asset finance, Melanie helps businesses across Geelong, the Surf Coast, Melbourne and regional Victoria secure the right finance for their needs, whether purchasing new or used equipment. Contact Melanie on 03 9020 2699 for obligation-free advice on your used equipment finance options.
