What a lender sees when you finance a second-hand excavator
Most operators look at a used excavator and see a machine: the boom, the tracks, the sound of the pump. A lender looks at the same machine and sees an asset that has to still be worth something when the loan finishes. If you understand that shift in perspective, the finance conversation gets a lot easier.
This is general information only. Every lender sets its own rules, and nothing here is a promise that any machine will be funded.
Start with the end date, not the start date
A five-tonne excavator that is six years old today will be eleven years old at the end of a five-year loan. Many lenders think in terms of that finishing age. Some set a maximum machine age at the end of the term, and that can quietly shorten the loan you are offered on an older machine.
So when you are comparing machines, ask the lender one early question: what is the maximum age at the end of term for this type of equipment? It saves a lot of wasted inspections.
Hours tell a story, but not the whole story
The hour meter is the first thing most buyers check. Lenders look at it too, but they usually look at it alongside age and brand. Two machines with 6,000 hours are not equal if one spent its life digging trenches in clay and the other lifted pipe in a yard. Service records are the best evidence you can bring. A folder of dated invoices from a recognised workshop does more for you than a confident seller saying it has been looked after.
Brand and model matter
Common brands with a deep second-hand market are generally easier for a lender to value, because there is plenty of evidence of what they sell for. A rare import with parts that take six weeks to arrive can be a harder case. That does not mean you cannot buy one, only that you should expect more questions.
Dealer sale or private sale
Lenders can treat the two differently. Dealer sales usually come with an invoice, a warranty position and a seller who is easy to verify. Private sales can still be financed in many cases, but expect to supply more detail: proof the seller owns the machine, that there is no money owing on it, and what price was agreed. You can check whether a machine has finance owing by searching the government's Personal Property Securities Register. For general small business information, business.gov.au is a good starting point.
Work out what the machine must earn
Before you apply, do the unglamorous sum. Add the monthly repayment, insurance, servicing, fuel, transport and a sensible allowance for repairs. Then ask how many billable hours that takes to cover. If the answer is more hours than your best months, the machine is too expensive for your work, no matter how good the price looks.
A repayment you can only meet in a perfect month is not a repayment, it is a hope.
What to bring to the conversation
- Your last couple of years of financials and recent BAS statements.
- The machine's make, model, serial number, hours and photos.
- Service history and any pre-purchase inspection report.
- A clear idea of deposit, term and whether you want a balloon.
If you want to explore your own options, you can start an enquiry with a finance service and ask how they would assess the specific machine. Approval is always subject to lender criteria.
Things to compare, not just the rate
Rates get the attention, but compare the whole package: fees, the comparison rate, early repayment costs and whether the lender allows extra repayments. ASIC's MoneySmart has plain explanations of comparison rates and what they do and do not include.
The short version
A used excavator can be a very sensible purchase. Go in knowing how old it will be at the end, bring evidence of its history, and test whether the repayment survives a quiet month. Do that and you will have a better conversation with any lender, whichever machine you end up buying.
Thinking about your next machine?
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