Used machinery financing gives Australian businesses a way to purchase second-hand commercial equipment without paying the full purchase price upfront.
The equipment does not need to come from a dealership.
Eligible machinery purchased through a private seller or at auction can also be financed through selected lenders, provided the business and equipment meet the lender's requirements.
This can give contractors, farmers, manufacturers and other Australian businesses access to a much wider range of machinery.
The key difference is that a private sale or auction purchase can involve additional checks around ownership, equipment condition, market value and settlement.
The Asset Finance Shop (TAFS) arranges used machinery financing through access to more than 80 bank and non-bank lenders. Our internal credit team can review the business and proposed equipment before a formal lender application is made, helping identify lenders that suit the machinery, purchase method and overall application.
This guide explains how used machinery finance works in Australia, how private-sale and auction purchases are handled, what lenders assess and what businesses can do before committing to a machine.
Yes.
Australian businesses can finance eligible used machinery through selected commercial asset finance lenders.
Used machinery can potentially be purchased from:
The lender will assess both the applicant and the machinery being purchased.
This means the finance decision may depend on factors such as:
The strongest lender for a new excavator purchased from a dealer may not be the strongest lender for a ten-year-old loader purchased privately.
This is why lender matching matters.
Used machinery financing is commercial asset finance used to purchase second-hand machinery or equipment for business purposes.
Rather than paying the entire purchase price from business cash, the approved amount is financed over an agreed term.
TAFS primarily arranges machinery purchases using a chattel mortgage.
Under a chattel mortgage:
This structure can be used for eligible dealer, private-sale and auction machinery purchases.
New machinery is not always the right purchase for every business.
Used equipment may allow a business to:
For some operators, a well-maintained used machine can provide years of productive work.
The important part is assessing the equipment properly before committing to the purchase.
Used machinery finance can cover a broad range of commercial assets.
This can include:
This can include:
This can include:
This can include:
This can include:
Approval remains subject to the lender's requirements for the equipment and business.
Not necessarily.
Used equipment is financed every day.
The difference is that lenders may need to assess more information about the asset.
A new machine purchased through a recognised dealer usually has a clear:
With used equipment, the lender may need to look more closely at:
The older or more specialised the machinery becomes, the more important lender selection can be.
Different lenders have different limits around used equipment.
Some are comfortable financing older commercial machinery.
Others prefer newer equipment.
The lender may consider both:
How old is the machine today?
and:
How old will it be when the finance term ends?
For example, a seven-year-old excavator financed over five years will be 12 years old at the end of the facility.
That may affect which lenders and terms are available.
For many machines, operating hours can be as important as age.
The lender may look at hours on:
A lower-hour older machine may present differently from a newer machine that has already completed very heavy work.
Operating hours are generally considered alongside the equipment's condition and service history.
The lender wants to understand whether the equipment is suitable security for the finance.
Information may include:
An inspection may be required for some machinery.
The lender will consider whether the agreed purchase price appears reasonable.
This becomes especially important for private sales and auctions.
For example:
Purchase price: $120,000
Estimated market value: $90,000
The lender may not necessarily be comfortable financing the full $120,000 simply because that is the amount the buyer agreed to pay.
The purchase needs to make sense relative to the asset's value.
Used machinery often provides the security supporting the loan.
The lender may therefore compare:
An independent valuation may be requested where the equipment is:
The finance term should generally make sense for the machinery.
For example, financing equipment that is approaching the end of its practical working life over a long term may not suit the lender.
The lender may consider:
The lender may also want to understand why the business is buying the asset.
Examples could include:
A machine with a clear role inside an established business can be easier to understand from a commercial perspective.
A private sale means the equipment is being purchased directly from a business or individual rather than through a machinery dealer.
This could be another contractor who is:
Private sales can provide access to machinery that may never appear through a traditional dealer network.
Selected lenders can finance private-sale machinery.
The settlement process usually involves additional verification.
A lender may need to confirm:
These checks help ensure the lender is financing the correct asset and that the seller is entitled to sell it.
Commercial machinery does not necessarily have a registration number like a road vehicle.
The equipment serial number can therefore be one of the main identifiers used to confirm the machine.
The lender may use it to:
Ask the seller for the serial number early.
Do not wait until settlement if it can be obtained before applying.
Existing finance does not necessarily prevent the purchase.
However, the existing security needs to be dealt with correctly.
For example:
Used excavator price: $150,000
Seller's finance payout: $65,000
The settlement may need to involve paying the existing financier so its security can be released.
The remaining proceeds can then be dealt with according to the approved settlement instructions.
TAFS can coordinate the required information between the buyer, seller and lender.
Potentially.
An inspection may be requested where the machine is:
The lender may use the inspection to confirm:
Not every private sale requires an inspection.
Potentially.
A valuation can help establish whether the proposed purchase price is reasonable.
This may be more relevant where:
Whether a valuation is required depends on the lender.
Yes.
Selected lenders can finance eligible machinery purchased at auction.
Auction machinery finance is common for:
The major difference with an auction is timing.
You may need to bid before a final machine has been selected, and payment deadlines after the auction can be tight.
Potentially.
An initial assessment or pre-approval can help establish your likely finance position before bidding.
This may give you an indication of:
Final approval still depends on the equipment actually purchased.
A lender needs to know what asset will secure the finance.
Do not base your maximum bid only on the hammer price.
Consider the full transaction cost.
This can include:
For example:
Winning bid: $100,000
Buyer's premium: $5,000
Other costs: $4,000
The actual amount required to put the machine to work could be significantly higher than the headline auction price.
Understand what the lender will and will not finance before bidding.
Auction houses often have strict payment deadlines.
If finance is only investigated after the successful bid, the buyer may need to complete:
within a short period.
Preparing before the auction can reduce this risk.
The auction house will generally issue an invoice showing the successful purchase.
The lender may then require:
Once all lender conditions have been completed, the approved funds can be paid to the auction house.
Each purchase method has different practical considerations.
|
Purchase Method |
Main Advantage |
Common Additional Considerations |
|
Dealer |
Usually straightforward documentation |
May still require inspection for older equipment |
|
Private sale |
Wider access to used machinery |
Seller, ownership, security and value checks |
|
Auction |
Access to a broad range of machinery |
Short payment deadlines and final asset approval |
The right lender can depend on the purchase method as well as the business.
The required documentation depends on the lender and application.
For an initial assessment, you may need:
Further documents may include:
TAFS can confirm the documentation requirements once a suitable lender pathway has been identified.
Potentially.
Selected lenders can consider low doc used equipment loans.
Instead of requiring full current financial statements, the lender may assess information such as:
Low doc does not mean no assessment.
The lender still needs to establish whether the finance can be supported.
Yes.
Sole traders can apply for used machinery financing.
The lender may consider:
This can apply to sole traders working in areas such as:
Potentially.
Selected lenders can consider newer businesses.
The application may place more weight on:
For example:
ABN age: 7 months
Industry experience: 10 years
Machine: Used excavator
Current work: Existing excavation contracts
The lender can assess the complete background rather than the ABN age alone.
Not necessarily.
Deposit requirements vary by lender and application.
The lender may consider:
A deposit can reduce:
However, the business also needs enough working capital after the purchase.
Potentially.
Some applicants may qualify to finance the full equipment purchase price.
Whether this is available depends on:
Where the purchase price is above the lender's assessment of market value, the business may need to contribute the difference.
Yes, subject to the transaction.
A business replacing existing machinery may have equity available.
For example:
Trade-in value: $100,000
Finance payout: $45,000
Potential equity:
$55,000
That amount may potentially contribute toward the replacement machine.
The trade-in and payout can be incorporated into the settlement process.
TAFS primarily arranges machinery finance using a chattel mortgage.
The loan can be structured around:
The structure should make sense for both the business and the machinery.
Potentially.
A balloon leaves part of the loan balance outstanding at the end of the finance term.
For example:
Finance amount: $160,000
Term: 5 years
Balloon: $32,000
The regular repayments will generally be lower than financing the same amount with no balloon.
However, the business still owes $32,000 at the end.
For used equipment, the balloon should take into account:
The balloon should not exceed what makes commercial sense for the asset.
Potentially.
Older machinery does not automatically prevent approval.
The lender may assess:
Older machinery may result in:
This is why used machinery finance benefits from lender matching.
Grey imports or machinery imported outside the manufacturer's standard Australian distribution network may be considered by selected lenders.
Additional assessment may include:
Not every lender is comfortable with imported equipment.
Used machinery does not need to look new.
However, the lender generally expects the machine to be suitable for its intended commercial purpose.
Significant known repairs may affect:
Before buying, consider whether the purchase price plus required repairs still represents good value.
Specialised machinery can still be financed.
The lender may need to understand:
Highly specialised machinery may have fewer comparable sales, which can make valuation more important.
The asset is only half of the application.
The lender also needs to assess the borrower.
This may include:
How long has the business been operating?
How much relevant experience does the applicant have?
What revenue is the business currently generating?
How does money move through the business?
What finance commitments already exist?
How has existing credit been managed?
Can the business comfortably support the proposed machinery repayment?
Financing allows the business to acquire equipment without using the complete purchase price upfront.
For example:
Machine purchase: $180,000
Paying cash requires the business to use $180,000 immediately.
Financing may allow more cash to remain available for:
The business pays finance costs in return for retaining more working capital.
Used equipment finance can also make sense where the business is regularly paying to hire machinery.
For example, a contractor may spend:
$6,000 per month
hiring a particular machine.
Purchasing a used machine introduces:
but also removes or reduces the hire expense.
The correct comparison should include the complete cost of both options.
A second machine may allow a business to:
The lender may consider how the additional equipment contributes to future income.
Existing repayment history on the current machinery can also support an expansion application.
Another common use of used machinery financing is replacing an older unit.
Compare:
A machine that has no finance owing can still be expensive if repair and downtime costs have become excessive.
Not necessarily.
Purchase price is only one part of the cost.
Also consider:
A cheaper machine requiring significant work may ultimately cost more than a better-condition asset with a higher purchase price.
Straightforward machinery finance applications can be approved in as little as 24 hours once the required information is available.
Approval may take longer where the transaction involves:
Starting the assessment before committing to the purchase can reduce delays.
Finance approval does not always mean the transaction is ready to settle immediately.
Final settlement may still require:
Private sales and auction purchases can have more settlement steps than standard dealer purchases.
TAFS reviews:
TAFS looks at:
TAFS begins with a soft credit check that leaves no formal enquiry on the applicant's credit file.
The internal credit team pre-vets the application against lender requirements.
TAFS has access to more than 80 bank and non-bank lenders.
Different lenders may be better suited to:
TAFS can review:
Once a suitable option has been selected, the formal application is submitted to the chosen lender.
Depending on the transaction, the lender may complete:
Once all lender requirements have been satisfied, the approved funds are paid to the:
and the machinery purchase settles.
Before applying, prepare as much of the following as possible:
|
Area |
Details |
|
Business |
ABN and business structure |
|
Identity |
Driver's licence |
|
Banking |
Recent business bank statements |
|
Experience |
Relevant industry experience |
|
Current work |
Contracts, customers or projects |
|
Existing finance |
Machinery and business loans |
|
Equipment |
Make, model and year |
|
Usage |
Operating hours where relevant |
|
Purchase |
Agreed price |
|
Seller |
Dealer, private seller or auction |
|
Identification |
Serial number |
|
Condition |
Photos, service history or inspection information |
|
Contribution |
Deposit or trade-in |
|
Settlement |
Invoice and seller information |
Not every lender will require every item.
Ask:
Before bidding, ask:
Yes.
Selected lenders provide used machinery financing for eligible Australian businesses purchasing commercial equipment from dealers, private sellers and auctions.
Finance can potentially be arranged for excavators, skid steers, loaders, graders, rollers, dozers, tractors, harvesters, forklifts, manufacturing machinery and other commercial equipment.
Yes.
Selected lenders can finance eligible private-sale machinery.
The lender may need to verify the seller, ownership, serial number, existing security, condition and market value.
Yes.
Selected lenders finance eligible auction machinery.
Preparing the finance position before bidding can help because auction settlement deadlines can be short.
Potentially.
Pre-approval can provide an indication of borrowing capacity, deposit requirements and lender conditions.
Final approval depends on the actual machine purchased.
Potentially.
An inspection may be required for older, specialised, high-value or privately purchased machinery.
Potentially.
A valuation may be requested where the lender needs additional confirmation of market value.
Yes.
Different lenders have different equipment age requirements.
Older machinery may still be financeable but can affect the available lender, term, deposit and balloon.
Yes.
Hours can help the lender assess equipment usage and remaining working life.
Yes, subject to lender criteria.
Sole traders can finance eligible commercial machinery for business use.
Potentially.
Selected lenders consider newer businesses based on factors such as industry experience, current work, bank statements, credit history and the machinery itself.
Potentially.
Selected lenders may assess applications using recent bank statements and other current business information rather than complete financial statements.
Not always.
The documentation requirements depend on the lender and application.
Not necessarily.
Deposit requirements depend on the borrower, equipment and lender.
Potentially.
The available amount depends on lender criteria and the relationship between the purchase price and equipment value.
Yes, subject to the transaction.
Equity in existing machinery may contribute toward a replacement purchase.
TAFS primarily arranges chattel mortgage finance for eligible commercial machinery.
Your business owns the machine from settlement while the lender holds security over it until the finance is repaid.
Potentially.
A balloon can reduce regular repayments but leaves a larger final amount outstanding.
It should reflect the machinery's expected value at the end of the finance term.
Straightforward applications can be approved in as little as 24 hours once the required information is available.
Private-sale, auction or older-equipment transactions may require additional asset checks.
No.
TAFS reviews the application first, completes a soft credit check, pre-vets the transaction through its internal credit team, compares suitable lender options and then submits one formal application to the selected lender.
Used machinery can provide Australian businesses with a practical way to add capacity, replace ageing equipment or purchase a better-suited asset without paying the cost of new machinery.
And the machine does not need to come from a dealer.
TAFS can arrange eligible used machinery financing for equipment purchased through dealerships, private sellers and auctions.
Our internal credit team can review your business, available documentation and proposed machinery before comparing suitable options through access to more than 80 bank and non-bank lenders.
The Asset Finance Shop (TAFS) is a commercial asset finance brokerage based in Sydney.
Information on this page is general in nature and doesn't take your personal circumstances into account. Speak to a TAFS broker for options tailored to your business, and to your accountant regarding tax treatment.