Heavy machinery is one of the biggest investments a construction or earthmoving business will make. Excavators, bulldozers, loaders, cranes, and specialised plant are essential to winning contracts and getting work done — but paying for them upfront can put serious pressure on cash flow. Heavy machinery loans allow Australian builders, civil contractors, and plant operators to access the equipment they need while preserving working capital for wages, fuel, materials, and the day-to-day costs that keep a project moving.
Whether you’re expanding your fleet, replacing ageing equipment, or gearing up for a larger contract, construction machinery loans offer a practical way to fund those purchases over time rather than draining your reserves in one hit. The key is finding the right loan structure, the right lender, and the right rate for your situation — which is where working with an equipment loan broker makes a measurable difference. A broker compares options across multiple lenders, including non-bank and specialist financiers that don’t deal directly with the public.
This guide walks through how heavy machinery finance works in Australia, the loan structures available, what lenders look for during approval, and how to position your business for the best possible outcome.
How Heavy Machinery Loans Work in Australia
Heavy machinery loans are a form of asset-backed finance. The equipment itself serves as security for the loan, which allows lenders to offer larger amounts over longer terms than they would with an unsecured business loan. Because the machinery holds tangible value and can be resold if needed, lenders are generally willing to fund a significant portion — and in some cases all — of the purchase price.
The process is relatively straightforward. Once you’ve identified the equipment you need, your broker or lender assesses the asset’s value, age, and condition alongside your business profile. If approved, the finance is structured over an agreed term — typically aligned with the expected working life of the machinery — and repayments can usually be arranged weekly, fortnightly, or monthly to match your cash flow cycle. An experienced asset finance broker can help you compare structures and lenders so the finance genuinely fits how your construction business operates.
If you’re looking for a step-by-step overview of the application process, our guide on how to apply for equipment finance covers what to prepare and what to expect at each stage.
Because construction work is often project-based and seasonal, loan structures can sometimes include features like balloon or residual payments. These reduce your regular repayments during the loan term, with a larger final payment at the end. This can be useful for managing cash flow during quieter periods, but it’s important to plan for that final payment — whether you intend to pay it out, refinance, or sell the equipment.
Loan Structures for Construction and Earthmoving Equipment
Not all heavy machinery loans are structured the same way. The right option depends on your business structure, tax position, how you plan to use the equipment, and whether you want to own the asset outright or retain flexibility to upgrade. Here’s how the most common structures compare.
Chattel Mortgage
A chattel mortgage is the most widely used structure for construction businesses purchasing heavy equipment. You take ownership of the machinery from settlement, while the lender holds a mortgage over the asset as security until the loan is repaid. This structure allows you to claim depreciation — including the instant asset write-off for eligible items — and deduct the interest component of your repayments. If your business is GST-registered, you can also claim the GST credit on the purchase price upfront in your next BAS, which provides an immediate cash flow benefit. Chattel mortgage is particularly popular among established builders, civil contractors, and earthmoving operators who want to build equity in their fleet.
Hire Purchase
Under a hire purchase arrangement, the lender purchases the equipment and hires it to you over an agreed term. Ownership transfers to you once the final payment is made. You can generally claim depreciation and deduct interest charges during the loan term, making it similar to a chattel mortgage from a tax perspective. Hire purchase can suit businesses that use cash accounting methods or prefer a slightly different ownership structure.
Finance Lease
A finance lease keeps the equipment on the lender’s books while you use it for the duration of the lease term. At the end of the lease, you can return the machinery, extend the lease, or purchase it at an agreed residual value. Because you don’t own the asset, you can’t claim depreciation — but lease payments are generally deductible as a business operating expense. Finance leases can suit businesses that want to keep assets off their balance sheet or that plan to upgrade equipment at regular intervals rather than holding it long-term.
Operating Lease and Rent-to-Own
An operating lease is essentially a rental arrangement where you return the equipment at the end of the term. It suits short-term or project-specific equipment needs where ownership isn’t the goal. Rent-to-own arrangements work similarly, but a portion of your rental payments goes toward the purchase price, giving you the option to buy the machinery outright at the end. These structures are less common for heavy machinery but can make sense in specific situations.
Low-Doc and No-Doc Options
For businesses without full financial statements — common among tradies, subcontractors, and operators with irregular income — low-doc heavy machinery loans reduce the paperwork required. Instead of tax returns and detailed financials, lenders may accept BAS statements, bank statements, or an accountant’s declaration. No-doc options go further still, relying primarily on the asset’s value and the borrower’s ABN history. These products typically require a stronger deposit or carry higher rates, but they provide a realistic pathway to finance for businesses that don’t fit the standard bank mould.
Flexible Equipment Lines (Revolving Credit)
If your business has ongoing equipment needs, a pre-approved equipment line — sometimes called a revolving credit facility — lets you draw down funds for multiple purchases without reapplying each time. These facilities can be approved for amounts up to several million dollars and work similarly to a line of credit for machinery. They’re particularly useful for growing construction and plant hire businesses that acquire equipment regularly and want to move quickly when the right deal presents itself.
For a broader look at how asset finance compares across different structures and industries in Australia, Money.com.au’s guide to asset finance (opens in a new tab) provides a useful independent overview.
What Equipment Can Be Financed?
Heavy machinery loans can be used for a wide range of construction, earthmoving, and civil plant — provided the equipment meets lender requirements around age, condition, and resale value. Lenders generally favour income-producing assets that hold their value and have an active secondary market.
Common equipment types that can be financed include:
- Excavators — from mini excavators for residential work through to large machines for civil and mining projects
- Bulldozers and dozers for site clearing and bulk earthworks
- Wheel loaders, track loaders, and skid steers
- Cranes, lifting equipment, and elevated work platforms
- Graders, rollers, and compactors for road and civil works
- Dump trucks — both articulated and rigid — for haulage
- Concrete pumps, batching plants, and concrete trucks
- Backhoes, trenching equipment, and boring machines
- Attachments and specialised plant such as rock breakers, augers, and screening equipment
- Forklifts, scissor lifts, and material handling equipment
Both new and used equipment can typically be financed. New machinery often attracts longer loan terms and more favourable rates due to its longer expected working life, manufacturer warranties, and clearer resale value. Used equipment can offer better value for money and shorter lead times — you can often take delivery immediately rather than waiting months for a factory order. Lenders assess used machinery based on age, condition, hours of operation, and overall asset quality. Some lenders impose age limits (for example, requiring the equipment to be under 15 or 20 years old at the end of the loan term), while others have no age restrictions at all.
Private sale purchases can also be financed. If you find a machine through an online listing, at auction, or from another operator, many lenders will fund the purchase provided you can supply the asset details — make, model, year, serial number, and sometimes engine hours or an independent valuation.
What Lenders Assess for Heavy Machinery Loan Approval
Understanding what lenders look for helps you prepare a stronger application and avoid unnecessary delays or declines. While every lender has its own criteria, the following factors are assessed in most heavy machinery loan applications.
ABN, GST Registration, and Business Age
You’ll need an active Australian Business Number, and most lenders prefer GST registration as it indicates your business is actively trading above the $75,000 turnover threshold. Business age matters — lenders generally favour operators with at least 12 to 24 months of trading history. However, newer businesses and startups aren’t automatically excluded. Some non-bank lenders will consider applications from businesses with as little as 6 months ABN registration, particularly where the borrower has relevant industry experience and a reasonable deposit.
Credit Score and Credit History
Your personal and business credit history is a key factor in heavy machinery loan approval. Most mainstream lenders look for credit scores of 550 or above for their best rates. However, specialist and non-bank lenders work with a wider range of credit profiles — some accepting scores as low as 400 to 450, provided the borrower demonstrates current business strength and a viable repayment capacity. If your credit is impaired due to past defaults, judgements, or other blemishes, it doesn’t necessarily mean you can’t get finance — but transparency with your broker is essential so they can match you with the right lender from the outset.
Financial Documentation
Documentation requirements scale with the loan amount. For smaller loans — often up to $150,000 — many lenders offer low-doc pathways that require minimal income verification, relying instead on your ABN history, BAS statements, or bank statements. For loans between $150,000 and $500,000, lenders typically want to see business bank statements to assess cash flow and liquidity. For larger amounts above $500,000, full financial documentation is usually required, including profit and loss statements, balance sheets, tax portals, asset and liability statements, and commitment schedules.
The Equipment Itself
Because the machinery acts as security, lenders assess it carefully. They consider the make, model, age, condition, hours of operation, and expected resale value. Mainstream equipment from well-known manufacturers — Caterpillar, Komatsu, Volvo, Hitachi, Liebherr, and similar — is generally easier to finance than obscure or highly specialised machinery. New equipment with manufacturer warranties and dealer backing attracts the most favourable terms, but well-maintained used machinery with solid working life remaining is also widely financed.
Deposit and Equity
Deposit requirements vary significantly. Established businesses with clean credit may be able to finance heavy machinery with no deposit at all. For newer businesses, those with impaired credit, or higher-risk applications, a deposit of 10% to 30% is common. A meaningful deposit reduces the lender’s loan-to-value ratio, can improve your interest rate, and demonstrates your financial commitment. Trading in existing equipment can count toward your deposit contribution.
Industry Experience
Particularly for newer businesses or owner-operators, demonstrating relevant industry experience can strengthen your application. A plant operator with 15 years of experience starting their own business is a very different risk profile to someone entering the industry for the first time. Licences, qualifications, employment history, and contracts in hand all count in your favour.
How to Get the Best Heavy Machinery Loan Rates
Heavy machinery loan rates in Australia vary depending on several factors, and the difference between a competitive rate and a poor one can cost your business tens of thousands over the life of the loan. Here’s what influences your rate and how to position yourself for the best outcome.
The strongest rates generally go to established businesses with clean credit, a solid trading history, and a meaningful deposit, financing new or near-new mainstream equipment. Every variable that increases the lender’s perceived risk — shorter ABN history, impaired credit, older equipment, no deposit, low-doc application — tends to push the rate upward.
To find the best construction machinery loan rates for your situation, focus on the factors you can control. Put together the largest deposit you can reasonably afford. Ensure your BAS lodgements and business bank statements are up to date and reflect healthy cash flow. Check your credit file before applying and resolve any errors. Choose mainstream equipment with strong resale value where possible. And critically, use a broker rather than applying directly with a single lender. A broker compares rates and terms across their entire lender panel — including specialist construction finance lenders — and submits your application to the lender most likely to offer the best deal for your specific profile. This also avoids multiple credit enquiries, which can themselves affect your score.
Be wary of focusing solely on the interest rate. Fees, loan terms, balloon payment structures, early repayment penalties, and overall flexibility all affect the true cost of the loan. A slightly higher rate with no fees and flexible repayment terms may be a better deal than a lower headline rate loaded with charges.
Benefits and Risks to Consider
Financing heavy machinery offers genuine strategic advantages for construction and earthmoving businesses, but it’s worth understanding both sides before committing.
The primary benefit is preserving working capital. Cash is the lifeblood of project-based businesses — you often need to cover wages, fuel, materials, and subcontractor payments before you receive payment from clients. Spending $200,000 or more on a machine in cash depletes that buffer. Financing allows you to keep that capital in your business and spread the cost of the equipment over a manageable repayment period. It also enables you to access higher-value machinery sooner, take on larger contracts, and upgrade ageing equipment before it becomes a liability on site.
From a tax perspective, construction machinery loans — particularly chattel mortgages — allow you to claim depreciation on the asset, deduct interest charges, and potentially access government incentives like the instant asset write-off for eligible items. These deductions can meaningfully reduce your taxable income.
On the other side, it’s important to ensure that repayment terms align with the working life and earning capacity of the equipment. Financing a machine that sits idle for extended periods still costs you in repayments. Balloon or residual payments need to be planned for — they reduce your monthly outgoings but create a lump sum obligation at the end of the loan. And older or highly specialised equipment may attract stricter lending criteria or higher rates, which can erode the financial benefit if not structured carefully.
The right approach is to treat equipment finance as a tool that supports your business operations and growth — not as a way to acquire machinery you don’t genuinely need. A well-structured heavy machinery loan should make your business stronger, not stretch it.
FAQ
What are typical heavy machinery loan rates in Australia?
Heavy machinery loan rates in Australia typically range from around 5% to 12% per annum, depending on the lender, your credit profile, the age and type of equipment, deposit amount, and loan term. Businesses with strong credit, solid trading history, and a meaningful deposit generally attract rates at the lower end. Non-bank lenders may offer slightly higher rates but with more flexible eligibility criteria. Getting a current quote through a broker is the most reliable way to find competitive pricing.
Can I finance used or second-hand heavy machinery?
Yes. Most lenders in Australia finance both new and used heavy machinery. Second-hand equipment often represents better value, particularly for businesses that don’t need the latest model. Lenders assess the age, condition, hours of use, and resale value. Some lenders have age restrictions — for example, requiring equipment to be under 15 or 20 years old at the end of the loan term — while others have no age limits. Used machinery from dealers or private sales can both be financed.
How long does heavy machinery loan approval take?
Many heavy machinery loan applications are assessed within 24 to 48 hours. For straightforward applications — established businesses with clean credit financing mainstream equipment — some lenders offer same-day conditional approval. More complex applications involving larger amounts, low-doc arrangements, or impaired credit may take longer. Having your documentation ready before applying helps speed up the process significantly.
What credit score do I need for a construction machinery loan?
Most mainstream lenders prefer a credit score of 550 or above for competitive rates. However, some specialist and non-bank lenders work with borrowers who have scores as low as 400 to 450, assessing applications based on current business revenue, the asset being financed, and deposit strength. If your credit is impaired, working with a broker who has access to specialist lenders gives you the best chance of approval at a reasonable rate.
Can I get a heavy machinery loan as a startup or new business?
Yes. While most lenders prefer 12 to 24 months of trading history, options exist for startups and newer businesses. You may need a larger deposit (typically 20–30%), clean personal credit, and relevant industry experience. Some non-bank lenders consider applications from businesses with as little as 6 months ABN registration. Mainstream equipment with strong resale value is easier to finance as a new business.
What is the difference between a chattel mortgage and a finance lease?
The main difference is ownership. With a chattel mortgage, you own the machinery from day one and can claim depreciation and GST credits upfront. With a finance lease, the lender owns the asset and you lease it — you can’t claim depreciation, but lease payments are generally deductible. At the end of a finance lease, you can return the equipment, extend the lease, or purchase it at residual value. Chattel mortgage is typically preferred by construction businesses wanting to maximise tax deductions.
Can I finance heavy equipment from a private sale?
Yes. Many lenders and brokers arrange finance for private sale purchases, not just dealer transactions. You’ll need to provide details including make, model, year, serial number, and sometimes engine hours or an independent valuation. The lender uses this to verify asset value and condition. Private sale finance can help you secure a bargain, but allow extra time for the lender’s verification process compared to a dealer purchase.
How much deposit do I need for a construction machinery loan?
It depends on your business profile. Established businesses with strong credit may finance machinery with no deposit or a minimal contribution. For newer businesses, impaired credit, or higher-risk applications, a deposit of 10% to 30% is common. A larger deposit reduces lender exposure, improves your interest rate, and strengthens your application. Trade-ins can also count toward your deposit.
What types of construction equipment can be financed?
A wide range of equipment can be financed, including excavators, bulldozers, wheel loaders, skid steers, graders, rollers, compactors, cranes, concrete pumps, dump trucks, backhoes, trenching equipment, batching plants, forklifts, scissor lifts, and attachments. Both new and used machinery is eligible. Lenders favour income-producing assets with strong resale value. Highly specialised or very old equipment may face stricter criteria.
Is it better to lease or buy construction machinery?
It depends on your situation. Buying (via chattel mortgage or hire purchase) suits businesses wanting to own the asset, claim depreciation, and build fleet equity. Leasing suits those who prefer to upgrade regularly, keep assets off-balance sheet, or avoid residual value risk. Construction businesses with long-term equipment needs often prefer ownership, while those with project-specific requirements may benefit from leasing. Your broker and accountant can help determine the best structure for your cash flow and tax position.
Ready to find the right finance for your next piece of heavy machinery? Talk to the team at Unconditional Finance about your options and get a clear picture of what’s available for your construction business.