Quick Answer
Securing used equipment finance approval in Australia requires demonstrating a strong business profile, ensuring the asset meets lender criteria, and preparing comprehensive documentation. In 2026, indicative rates for used equipment loans typically range from 7-14%+ p.a., influenced by factors like business age, financial health, and the equipment’s age and condition. Major banks (CBA, NAB, Westpac) and specialist non-bank lenders (Pepper, Liberty, Prospa) offer solutions, often via chattel mortgages or commercial hire purchase. Modern comparison platforms like Loan Phone simplify the process, connecting businesses to tailored options and specialist broker support, even for complex or “left-of-centre” scenarios.
| Business/Borrower Profile | Indicative Rate Range | Typical Term | Key Considerations for Approval |
|---|---|---|---|
| Established (2+ years, strong financials) | 7-10% p.a. | 3-5 years | Strong cash flow, good credit history, well-maintained asset. |
| Standard (1-2 years trading) | 10-13% p.a. | 2-4 years | Clear business plan, consistent revenue, asset valuation. |
| Developing/Newer (less than 1 year) | 13-16%+ p.a. | 1-3 years | Strong personal credit, significant deposit, asset suitability. |
Rates are indicative examples only, current as of 2026. Actual rates, terms, and eligibility depend on individual circumstances, lender assessment, asset type, and market conditions.
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By the Loan Phone team · Reviewed by Anthony Moncada, M.App.Fin, Cert IV Finance & Mortgage Broking, Director
1. Introduction: The Challenge of Financing Used Equipment
For many Australian businesses, investing in essential equipment doesn’t always mean buying brand new. Used equipment offers a cost-effective alternative, allowing businesses to conserve capital while still acquiring the machinery they need to grow. Whether it’s a second-hand prime mover, a pre-owned excavator, or a used medical device, financing these assets comes with its own set of considerations. Securing used equipment finance approval can be a nuanced process, often perceived as more complex than financing new assets.
The secondary market for equipment in Australia is robust, but lenders approach these assets with greater scrutiny. They assess not just your business’s ability to repay, but also the inherent risk associated with an older asset. This guide will walk you through the specifics of obtaining used equipment finance, providing practical tips and insights to boost your chances of approval in 2026. For a broader view, explore our comprehensive Equipment Finance Guide.
2. Understanding Used Equipment Finance in Australia
Used equipment finance typically involves securing a loan to purchase a pre-owned asset for business use. The most common finance structures in Australia for this purpose are:
- Chattel Mortgage: A popular option where your business owns the equipment from day one, and the lender takes a mortgage over it as security. This often allows for immediate GST input tax credits and depreciation benefits (subject to ATO guidelines and individual circumstances). Learn more about our Chattel Mortgage Guide.
- Commercial Hire Purchase (CHP): The lender purchases the equipment, and your business hires it over a fixed term. Ownership transfers to your business upon the final payment.
- Finance Lease: The lender purchases the equipment and leases it to your business. At the end of the lease, you typically have options to purchase the equipment, re-lease it, or return it.
These structures are similar to those used for new equipment, but the terms, interest rates, and eligibility criteria can differ significantly when a used asset is involved. To understand how these options work in practice, you might find our article on How Does Equipment Finance Work helpful.
3. Why Used Equipment Finance Differs from New Equipment Finance
Lenders view used equipment differently due to several inherent risks:
- Asset Depreciation & Value Retention: Used equipment generally depreciates faster and has a lower resale value compared to new equipment. This affects the lender’s security.
- Maintenance & Reliability: Older equipment may require more maintenance, leading to unexpected costs for the borrower and potentially impacting their ability to make repayments. This is a critical factor for items like truck finance or excavator finance.
- Valuation Challenges: Accurately valuing a used asset can be more complex than a new one, often requiring independent appraisals.
- Limited Lifespan: The remaining useful life of a used asset is shorter, which influences the maximum loan term a lender is willing to offer.
These factors mean lenders often apply stricter criteria, potentially offering higher interest rates or requiring more substantial deposits for used equipment. This often leads to differences when comparing brokers vs. banks for equipment finance.
4. Key Factors for Used Equipment Finance Approval
To improve your chances of used equipment finance approval, focus on these critical areas:
Your Business Profile and Financial Health
Lenders will thoroughly assess your business to gauge its capacity to repay the loan.
- Trading History: Most traditional lenders (CBA, NAB, Westpac, ANZ) prefer businesses with at least 2 years of trading history. However, specialist lenders like Pepper, Liberty, or Prospa may consider newer businesses (6-12 months) or those with limited trading history, especially if they have strong personal credit or industry experience.
- Financial Performance: Stable revenue, consistent cash flow, and profitability are key. Lenders will examine your financial statements (profit & loss, balance sheets, bank statements) to understand your business’s health.
- Credit History: A clean credit history for both the business and its directors is crucial. Any past defaults or missed payments can impact approval, though specialist low-doc lenders may offer solutions for businesses with minor credit impairments. Explore options for Low-Doc Business Equipment Loans.
- Industry Stability: Businesses in stable, growing industries are generally viewed more favourably than those in volatile sectors. This is particularly relevant for self-employed business loans.
The Equipment Itself: Age, Condition, and Valuation
The asset you intend to finance is a major determinant of approval.
- Age Restrictions: While there’s no universal age limit, most lenders prefer equipment that is no older than 10-15 years at the end of the loan term. Some specialist lenders might consider older assets if they are well-maintained and have a strong residual value.
- Condition Assessment: Lenders want assurance that the equipment is functional and has a reasonable remaining useful life. They may require a professional inspection or valuation report, especially for high-value or specialised machinery.
- Purpose and Use: The equipment must be genuinely for business use (typically 51% or more). Lenders will assess how essential the equipment is to your operations and its revenue-generating potential.
- Valuation: Be prepared to provide a clear valuation of the used equipment. This might be a recent appraisal, a detailed invoice from a reputable dealer, or comparable sales data.
Documentation and Application Strategy
A well-prepared application can significantly expedite the approval process.
- Comprehensive Documentation: Have your financial statements, tax returns (business and personal), bank statements (typically 6-12 months), and ABN details ready. For used equipment, a detailed invoice from the seller and any service history records are also important. For those operating with an ABN, understanding ABN finance options is key.
- Clear Business Case: Articulate why you need the specific used equipment, how it will benefit your business, and how it will contribute to revenue or efficiency.
- Deposit: While 100% finance is possible, offering a deposit (e.g., 10-20%) can reduce the lender’s risk and potentially secure a lower interest rate. This is especially true for newer businesses or older assets.
- Broker Assistance: Engaging a specialist finance broker can be invaluable. They understand lender appetites for used equipment, can help structure your application, and match you with the most suitable lender from a panel of options.
5. Tips for a Smooth Used Equipment Finance Approval Process
- Know Your Equipment: Thoroughly research the used equipment’s history, condition, and market value. Get a professional inspection if possible.
- Know Your Numbers: Understand your business’s financial health inside out. Be realistic about your repayment capacity.
- Prepare Your Documents: Gather all necessary financial and equipment-related documents in advance. A complete application avoids delays.
- Consider a Deposit: Even a small deposit can significantly strengthen your application, particularly for older assets or if your business is newer.
- Leverage a Comparison Platform: Use services like Loan Phone to compare options from over 100 lenders simultaneously. This saves time and ensures you’re not missing out on competitive offers from specialist non-bank lenders who are often more flexible with used equipment.
- Be Honest and Transparent: Provide accurate information. Any discrepancies can lead to delays or outright rejection.
6. Comparing Lender Options: Banks vs. Non-Banks and Brokers
When seeking used equipment finance approval, you have several avenues:
- Major Banks (CBA, NAB, Westpac, ANZ): Often offer competitive rates for established businesses with strong financials and relatively newer used equipment. Their criteria can be stricter regarding asset age and business history. For a detailed comparison, see our article on ANZ vs CBA Equipment Finance.
- Specialist Non-Bank Lenders (Pepper, Liberty, Selfco, Azora, Lumi, Prospa): These lenders often have a greater appetite for used equipment, newer businesses, or those with complex scenarios. While rates may be slightly higher, their flexibility can be a significant advantage. Discover more about Best Equipment Finance Lenders in Australia.
- Comparison Platforms & Brokers (Loan Phone): A platform like Loan Phone provides access to both major banks and specialist non-bank lenders. This allows you to compare a wide range of options tailored to your specific needs, including “left-of-centre” solutions. Our specialist brokers can guide you through the process, helping you structure your application for the best chance of approval. See how we can help with all your Equipment Finance needs.
7. Example: Financing a Used Excavator
Financing a Used 2018 Komatsu PC138US Excavator
| Purchase Price (incl. GST) | $120,000 |
| Deposit | $0 |
| Amount Financed | $120,000 |
| Indicative Interest Rate | 9.95% p.a. |
| Term | 4 years (48 months) |
| Indicative Monthly Repayment | $3,040 |
| Total Cost Over 4 Years | $145,920 |
This example is for illustrative purposes only. Actual rates, terms, and repayments depend on lender assessment, your individual circumstances, the specific asset, and current market conditions. Consult your accountant regarding tax implications.
8. Frequently Asked Questions
Is it harder to get finance for used equipment compared to new? +
Yes, it can often be more challenging. Lenders typically perceive used equipment as having higher risk due to depreciation, potential maintenance issues, and shorter remaining useful life. This can lead to stricter eligibility, higher rates, or shorter terms. For more details, explore our guide on Asset Loan vs Equipment Finance.
What is the maximum age for used equipment that can be financed in Australia? +
There's no strict universal maximum age, but many lenders prefer equipment that will be no older than 10-15 years at the end of the loan term. Specialist lenders may consider older assets if they are well-maintained and have a strong valuation. This flexibility is a key advantage of working with specialist finance brokers.
Do I need a deposit for used equipment finance? +
While 100% finance is possible, providing a deposit (e.g., 10-20%) can significantly strengthen your application, especially for older equipment or newer businesses, and may help secure a better interest rate. This is often discussed in detail when assessing business loan suitability.
What documents are typically needed for used equipment finance approval? +
You'll generally need your ABN, financial statements (P&L, balance sheet), tax returns (business and personal), 6-12 months of bank statements, and a detailed invoice or valuation for the used equipment. For less conventional scenarios, low-doc equipment finance options exist.
Can I get low-doc finance for used equipment? +
Yes, specialist lenders often offer low-doc options for used equipment finance. These typically require less formal documentation but may involve higher interest rates or require a stronger personal credit profile. This is often the case for ABN holder loans without extensive financial records.
9. Get Used Equipment Finance for Your Business
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Related Resources
Explore these related guides for business owners and ABN holders:
Disclaimer: This article provides general information only and should not be relied upon as financial or tax advice. Rates, terms, and eligibility vary by lender and individual circumstances. Tax benefits are subject to your specific business structure and circumstances. Always seek independent professional advice from a qualified accountant and financial adviser before making financing decisions.
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Last updated: 2026-03-26