Buying pre-owned machinery can be a smart way to keep cash in the business while still upgrading capability. But finance can feel less straightforward when the asset is older, the seller is private, or the equipment doesn’t come with a neat dealer invoice.
This guide to used equipment finance Australia explains how lenders typically assess second-hand purchases, what “acceptable age” really means, how used equipment loan rates are priced, and what to prepare if you’re buying through a private sale. It’s written for tradies, contractors, farmers, and business owners who want practical answers before they apply.
Like any business finance, outcomes vary between lenders. The right structure, documentation, and asset choice can make a meaningful difference — especially when you’re financing used machinery or heavy equipment.
If you’re comparing options, focus on total cost and flexibility, not just the headline rate. Repayments, fees, and any end-of-term balloon (residual) are what will impact your cash flow over time.
Used equipment loans can cover everything from utes and trailers through to excavators, skid steers, tractors, and specialised plant. The main question is whether the equipment suits the lender’s policy and whether the deal stacks up from a risk and valuation perspective.
For business owners who are short on financials (common in seasonal work or newer operations), a low doc private sale equipment loan may be possible with the right evidence of income and a sensible deposit.
How used equipment loans work
A used equipment loan is generally a form of asset finance where the equipment itself helps support the lending decision. In many cases, the lender takes security over the asset, which is why equipment finance can be more accessible than an unsecured business loan.
In practice, you’ll usually need to provide:
- Business and/or personal identification
- Details of the equipment (make, model, year, serial/VIN, hours, condition)
- Purchase details (seller details, invoice or contract of sale, payment instructions)
- Evidence of affordability (bank statements, BAS, accountant letter, or financials depending on the lender)
Once approved, the lender pays the seller (dealer or private), and you repay the loan over an agreed term, commonly 1–5 years depending on the asset and policy.
What lenders look for with second-hand machinery and private sales
Second hand equipment finance is assessed differently to new purchases because lenders think about resale value and verification. These are the most common decision points.
- Asset age and expected remaining life
- Condition, usage (hours/kilometres), and service history
- Type of seller (dealer tends to be simpler than private)
- Valuation and whether the purchase price is in line with market
- Whether the equipment is fit-for-purpose for your line of work
Private sales can still be financeable, but they typically involve extra steps, such as verifying ownership, checking PPSR, confirming the serial number/VIN, and ensuring the contract of sale is complete and consistent with valuation.
If you’re buying older machinery, expect the lender to be more conservative on term length and deposit requirements. Some lenders reduce maximum terms as equipment ages to manage risk.
Used equipment loan rates, deposits, fees, and cash flow
Used equipment loan rates are generally influenced by risk. Compared to brand-new assets, used equipment can attract a slightly higher rate, a higher deposit, or both — especially for older equipment, niche machinery, or private sales.
Costs and terms to understand before you apply:
- Interest rate and whether it’s fixed for the term
- Establishment and documentation fees
- Ongoing fees (if applicable)
- Deposit (often larger for older assets or private sales)
- Balloon/residual (lower repayments now, but a lump sum later)
Misconception to avoid: “Lower monthly repayments means it’s cheaper.” A residual can reduce repayments but may increase overall cost and creates an end-of-term obligation. Always run the numbers against your cash flow and your plan (keep, sell, refinance, or pay out).
If you’re applying for equipment loans without financials or with limited documentation, lenders may price the risk differently. That doesn’t mean it’s a bad option — it just means you should compare total cost and approval likelihood side-by-side.
Common finance structures for used machinery
Chattel mortgage
Often used when the business wants to own the asset from day one. The lender takes security over the equipment and you repay principal and interest over the term. GST and tax treatment depend on your circumstances, so it’s worth confirming with your accountant.
Finance lease
A lease-style structure where the financier owns the equipment during the lease term and you pay to use it. There’s usually an option to purchase at the end. Leases can suit businesses that prefer flexibility, but the best structure depends on cash flow and tax position.
Hire purchase
Commonly used for equipment purchases where ownership transfers at the end of the term after final payment. Terms, fees, and tax treatment vary and the product is less common with some lenders today, but it can still be relevant in certain scenarios.
Unsecured or low-security options
An unsecured machinery loan (or low-security option) can be available for smaller amounts or strong borrowers, but it usually costs more because the lender has less protection if the loan defaults.
FAQ
Can you finance used equipment in Australia?
Yes. Many lenders offer used equipment loans for cars, utes, trailers, plant, and machinery. The main factors are the asset’s age, condition, and resale value, plus your ability to service the repayments. Dealer purchases are usually simpler, but private sales can also be financeable with the right contract, identification of the asset, and valuation checks.
What age equipment can you finance?
It depends on the lender and the equipment type. Some lenders have a maximum age at the start of the loan, while others focus on the age at the end of the term. As equipment gets older, lenders may shorten the maximum term and ask for a larger deposit. If the equipment is specialised, they may also require a stronger valuation or service history.
Is used equipment finance more expensive?
It can be. Used equipment loan rates may be higher than new equipment finance because lenders factor in depreciation and resale risk. Older assets and private sales can also increase pricing or deposit requirements. That said, the total deal can still be cost-effective if the purchase price is lower and the equipment generates reliable income.
Can I finance a private sale purchase of machinery?
Often, yes — but expect more checks. Lenders typically want a contract of sale, clear proof of ownership, the asset identifiers (serial/VIN), and sometimes a valuation. They may also run a PPSR check. Private sales can be approved, but you’ll usually need to be organised with documentation to avoid delays.
What deposit do I need for second-hand equipment finance?
Deposits vary by lender, credit profile, and equipment age. Newer used equipment from a dealer may require a smaller deposit, while older machinery or private sales often require more. A deposit can improve approval chances and may reduce pricing by lowering the lender’s risk exposure.
Can I get a low doc loan for a used machinery purchase?
Possibly. Some lenders consider low doc applications for used equipment, including private sales, if you can show affordability through alternatives like business bank statements, BAS (if available), invoices, or an accountant letter. The trade-off can be a higher rate, a larger deposit, or stricter asset criteria.
What documents should I prepare before applying?
At minimum, have your ID, ABN/ACN details, and the equipment details (year, make, model, serial/VIN, hours, condition). You’ll also need seller details and a tax invoice or contract of sale. For private sales, add proof of ownership and be ready for valuation and PPSR checks. Income evidence varies by lender, so having recent bank statements ready is helpful.
Are used farm equipment loans assessed differently?
They can be. Lenders often consider the asset type (tractor vs implement), hours/condition, and market demand in your region. Seasonal income can also affect serviceability assessment. Being able to show consistent cash flow or forward contracts can help support the application.
Are used construction equipment loans harder to get approved?
Not necessarily, but lenders can be more cautious with very high-hour equipment, older plant, or specialist machinery. If the equipment has strong resale value, is sourced from a reputable supplier, and the purchase price aligns with market, approvals can be straightforward. Private sales and niche assets typically require more documentation.
If you’re weighing up a second-hand purchase, the fastest path is usually to confirm the asset’s identifiers and condition early, line up the right evidence of affordability, and choose a loan structure that matches your cash flow. For Australia-wide support on used equipment loans, speaking with an equipment finance broker can help you avoid policy traps and apply with confidence.