Quick answer
Yes, used equipment can be financed, usually through a chattel mortgage or hire purchase secured over the item. Lenders value the asset on its resale market, may limit the term by its age, and often want an inspection or independent valuation. Before you pay, search the Personal Property Securities Register to confirm the seller can pass clear title, especially in private sales.
Key points
- Lenders finance used equipment against its realistic resale value, not the price you negotiated
- Terms are usually shorter for older items because lenders consider the asset's age when the loan ends
- A PPSR search on a serial-numbered item can reveal that someone else already has a security interest over it
- Private sales usually carry no GST credit, which changes the true cost compared with a dealer
- Auctions move fast, so finance approval should be arranged before you bid
The bargain is real. A five-year-old CNC router at half its new price, a used tipper from a retiring owner, a second-hand commercial oven from a restaurant that closed. Used equipment lets a business start earning sooner for much less capital.
It also moves some risk onto you: the machine’s condition, its history, and, less obviously, whether the person selling it actually owns it free of debt. Here’s how the finance works and where to take care.
Will a lender finance used equipment?
Mostly yes. Used equipment finance works the same way as new: a chattel mortgage or hire purchase with the asset as security. What changes is how the lender sets the terms.
Lenders think about three questions:
- What is it worth today, and what will it be worth when the loan ends? An asset whose resale value is predictable, like a common truck or a popular excavator, is easy to lend against. A custom-built machine with a handful of potential buyers is harder.
- How old will it be at the end of the term? This is the thing many buyers miss. Lenders often work backwards from the asset’s age at payout, so a nine-year-old item on a five-year term becomes a fourteen-year-old item at the end.
- Can the seller pass clear title? The lender needs to take first security over the asset.
Our introduction to how equipment finance works covers the general mechanics.
How do lenders value second-hand equipment?
They tend to lean on one or more of these:
- the dealer’s or seller’s invoice, if it’s a normal market sale
- published market data or guides for common vehicles and plant
- an independent valuation or inspection for specialised or higher-value items
- the equipment’s serial number, hours or kilometres, service records and photographs
If the price you’ve agreed is above what the lender thinks the asset is worth, the finance is usually based on the lower figure, and you cover the gap with a deposit. That’s one reason to ask the lender for a view on value before you commit to a seller, not after.
How does the age of the asset change the terms?
There isn’t a single cut-off, but the pattern is consistent: older assets mean shorter terms, bigger deposits, less flexibility on balloons and, sometimes, a different type of lender.
| Asset age | What to expect |
|---|---|
| Nearly new | Close to new-asset terms, subject to condition |
| Mid-life | Standard terms, possibly slightly shorter, valuation may be requested |
| Older | Shorter terms, larger deposit, restrictions on balloon size, specialist lender more likely |
| Very old or unusual | May not be financeable as security; consider an unsecured loan or other security |
If your target machine is older, ask early whether the lender sets age limits at the end of the term. It is a much shorter conversation than waiting for a decline after you’ve paid an inspection fee.
Why should you check the PPSR before paying a seller?
This is the single most valuable habit in used-equipment buying, and the one that doesn’t get mentioned in the brochure.
The Personal Property Securities Register (PPSR) is the national record of security interests in personal property. When someone borrows against a machine, the lender usually registers its interest. If the seller still owes money and sells the machine anyway, the lender’s interest can follow the machine to you. For serial-numbered goods like vehicles, trailers and many types of plant, a registered interest can survive the sale, which can leave you out of pocket or dealing with a lender who wants its machine back.
A search is quick and inexpensive, and you do it using the serial number or VIN. Our PPSR explainer and the glossary entry show how it works. Practical rules:
- Search before you pay a deposit, not after.
- Search by the serial number or VIN that you see on the item, not the one in the advertisement.
- If something is registered, ask the seller to arrange a payout or discharge at settlement.
- Many lenders run their own search as part of approval, which is a safety net, not a reason to skip yours.
What changes with a private sale?
Private sales can offer the best prices and the thinnest paperwork. Differences to plan for:
- No GST credit. A private seller doesn’t charge GST, so you can’t claim one. A $30,000 private purchase is $30,000 of true cost. A GST-registered dealer’s $33,000 price includes $3,000 you can generally claim back if you’re registered, so the true cost is $30,000 and the two are level.
- Less recourse. There’s no dealer warranty, and the sale is usually “as is”.
- Title risk. Check ownership, identity and the PPSR yourself.
- Payment timing. A lender will want an invoice or contract, and often pays the seller directly rather than handing you cash to pass on.
If you’re buying from a private seller, get a written sale agreement with the serial number, the price, the date and a statement that the item is free of security interests.
What about auctions and quick sales?
Auctions are where used equipment is often cheapest and where finance timing is tightest. You may have days, or hours, between winning and paying, and a buyer’s premium on top of the hammer price.
- Arrange pre-approval before you bid, with a limit in mind.
- Include the buyer’s premium, fees and any GST in the amount you ask the lender to approve.
- Check terms on payment deadlines and collection. A missed deadline can mean losing the deposit.
- Remember the inspection usually happens before the auction, so go and look.
Can you claim tax benefits on used equipment?
Yes. The instant asset write-off doesn’t distinguish between new and used, so a second-hand item that costs under $20,000, used or installed ready for use in the income year, can qualify for a full deduction for an eligible small business. Used assets above the threshold are depreciated in the normal way. Our guide on the instant asset write-off and equipment finance explains the timing and cost tests.
For vehicles, the car limit and payload rules may apply. How to finance a work ute covers those, and financing a truck covers heavy vehicles.
An illustrative example
A Hobart joinery business finds a five-axis CNC machine with a two-year-old controller for $96,000 plus GST from a Melbourne workshop upgrading its line.
- Before travelling, the owner asks a finance specialist whether the machine’s age and model would suit the lender, and receives an indicative yes with a request for an inspection report.
- A PPSR search by serial number turns up a registered security interest from the seller’s financier. The seller arranges a payout at settlement, with the lender’s discharge confirmed in writing.
- An independent inspection finds worn spindle bearings. The owner negotiates $7,500 off and the lender finances the revised price.
- The loan runs four years, with a modest balloon, and the machine is insured from the moment of settlement.
Each step added a little time. Together they turned a risky purchase into a controlled one.
Questions to ask before you sign
- What is the machine’s age at the end of the term, and does the lender have a limit?
- Will the lender want an inspection or valuation, and who pays?
- Is the seller GST-registered, and does the invoice show GST correctly?
- Has a PPSR search been done, and is anything registered?
- Does the loan cover freight, delivery, installation and compliance costs?
- Is there a balloon, and does it still make sense for an older asset?
When a bank says no
If your bank is happy to lend on the equipment, that’s often the cheapest outcome, and worth taking seriously. Banks can be conservative on older or unusual items, though. Specialist asset financiers pay more attention to the machine and the work it will do, which often makes the difference. If your credit file is the obstacle, our guide to equipment finance with bad credit lays out the realistic options.
Getting the finance sorted before the seller’s phone rings
The best used-equipment deals go to buyers who can move quickly and confidently. Telling us about the item, its age and the price you’re negotiating costs a minute on our form, and leaves your credit file exactly as it was. We read it ourselves rather than circulating it among lenders, so you won’t be fielding a wave of calls, and then a person from our team phones you to talk through terms. The more accurately you describe the machine and the seller, the sooner we can point you to a lender that suits it.
Frequently asked questions
Can I get finance for second-hand equipment?
Yes. Many lenders finance used machinery, vehicles and plant, as long as the asset is identifiable, has a resale market, and is not too old for the term requested. Expect questions about age, hours or kilometres, condition and where you're buying it from.
What is the oldest equipment a lender will finance?
There is no single answer. Lenders usually think about the asset's age at the end of the loan, not today. A seven-year-old excavator on a three-year term may be easier to fund than a twelve-year-old one on a five-year term. Specialist lenders accept older items than banks, usually with a bigger deposit or a shorter term.
Why does a PPSR search matter when buying used?
The Personal Property Securities Register records security interests, such as a lender's mortgage over a machine. If the seller still owes finance on the item, the lender's interest can survive the sale, and in some cases you could lose the equipment or have to pay out the debt. A search before payment shows whether anyone has registered an interest.
Can I claim the instant asset write-off on used equipment?
Yes, if the item costs under the $20,000 threshold, you use it or install it ready for use in the income year, and your business qualifies. The write-off doesn't care whether the asset is new or used. Your accountant can confirm your position.
Do I pay GST when I buy used equipment?
It depends on the seller. A GST-registered dealer or business charges GST, which you can generally claim back if you're registered. A private individual doesn't charge GST, so there's no credit to claim. That means the same price from a dealer and a private seller are not equal in true cost.
Will the lender inspect the equipment?
For higher-value or specialised items, often yes, or they'll ask for an independent inspection or valuation report. The cost is usually yours, so ask before booking. For common vehicles and well-known models, lenders can often rely on market data and the dealer's documents.