The Complete Guide to Machinery Finance in Australia

Key highlights

• One application compares 80+ banks and non-bank lenders for you
• Rates from around 6.55% p.a. for strong, asset-backed machinery deals
• Low-doc and no-deposit structures available for eligible ABN holders
• Finance new or used plant from dealers, auctions or private sellers
• Terms typically 1 to 7 years with optional balloon or residual
• Same-day pre-approval and fast settlement may be available

How machinery finance works

Machinery finance is a form of secured asset finance: the equipment you are buying acts as the security for the loan, which is what keeps rates competitive compared with an unsecured business loan. A lender advances the funds to the seller, you take delivery of the machine, and you repay the amount over an agreed term in regular instalments. Because the plant itself is the collateral, most lenders do not require you to put up your home or other property as additional security for straightforward deals. The structure suits everything from a single skid-steer to a full earthmoving fleet. You choose the term, whether to include a deposit, and whether to set a balloon or residual at the end to lower monthly repayments. As a broker, Overdrive lodges one application and compares more than 80 banks and non-bank lenders, then matches your business, the asset and your cash-flow goals to a lender likely to say yes at a sharp rate. Approval, rate and terms are always subject to lender assessment.

Machinery-finance rates

Rates for machinery finance start from around 6.55% p.a. for strong, asset-backed deals, though the figure you are offered depends on several factors and is always indicative and subject to lender assessment. The strongest pricing tends to go to established ABN holders with clean credit buying newer, mainstream machinery through a dealer with a reasonable deposit or asset backing. Lower-doc applications, older or high-hour machines, smaller or cheaper assets, specialised or hard-to-resell equipment, and weaker credit profiles are all typically priced higher to reflect the added risk. Auction and private-sale purchases can also attract a small loading. Rather than a single sticker rate, think in terms of a range, and remember that the cheapest headline number is not always the best deal once fees, balloon terms and flexibility are factored in. Because Overdrive compares more than 80 lenders on one application, Simon can quickly show you where your particular deal is likely to price, and structure it to keep the overall cost down. Always check the comparison rate and total repayable, not just the advertised rate.

Low-doc and no-deposit options

You do not always need full financial statements to finance machinery. Low-doc options let eligible applicants qualify using bank statements, BAS or a simple asset-and-liability position rather than two years of tax returns and financials, which is useful if your accounts are not yet finalised or your business is growing quickly. These options are generally available to established ABN holders and may be priced a little higher to reflect the reduced verification. No-deposit machinery finance is also available for eligible applicants, meaning the lender funds up to the full purchase price so you keep working capital in the business. In practice, a deposit or trade-in can still help you access a sharper rate or a larger approval, so it is worth weighing the trade-off. The right mix of documentation and deposit depends on your credit profile, the age and type of machine, and how much you are borrowing. All of this is subject to lender criteria, and Overdrive can quickly tell you which low-doc or no-deposit structures your business is likely to qualify for before you commit to a purchase.

New ABN machinery finance

Having a newly registered ABN does not automatically rule you out of machinery finance. A number of lenders will consider newer businesses, and some will look at applicants with an ABN registered for as little as a few months, particularly where you have relevant industry experience, property backing, a deposit, or a strong personal credit history. The machine itself being solid security also works in your favour. Expect a lender to want to understand where the work is coming from, so evidence such as signed contracts, purchase orders or a pipeline of jobs can strengthen a new-ABN application considerably. Pricing for newer businesses is typically a little higher and terms may be slightly more conservative, both of which are indicative and subject to lender assessment. If you have recently moved from being an employee operator to running your own business, GST registration and a clean bank-statement history help. Overdrive works with lenders across the spectrum, so rather than being knocked back by a single bank's rigid policy, your one application is matched to lenders that actively support new and growing operators.

New versus used machinery

Both new and used machinery can be financed, and each has its place. New plant usually attracts the sharpest rates and longest terms because the asset is easy to value, comes with a manufacturer warranty and holds its resale value predictably over the loan. Used machinery is often the smarter buy for the cash it saves, and quality second-hand excavators, loaders, tractors and forklifts are financed every day. The main things a lender considers on a used machine are its age, hours, condition and how readily it could be resold if needed. Many lenders work to a maximum age at the end of the term, so a very old machine on a long term can be harder to place or may be priced higher, both indicative and subject to lender criteria. A recent independent valuation, service history and clear photos all help a used-asset application. Because Overdrive compares more than 80 lenders, there is usually an appetite somewhere for older or higher-hour gear that a single bank might decline, and Simon can tell you upfront what age and hours will and will not fly.

Dealer, auction and private purchases

Machinery finance is not limited to buying from a franchised dealer. You can finance a machine bought from a dealer, at auction, or in a private sale, which gives you the freedom to chase the best price wherever it sits. Dealer purchases are the most straightforward, with clean tax invoices and clear ownership that lenders are comfortable with. Auction buys are common in the machinery world and are well supported, though you generally need finance pre-approved before you bid so you can commit funds on the day, and some lenders apply a modest loading to auction and private deals. Private sales require a little more diligence: the lender will confirm the seller owns the machine outright and that there is no existing finance registered against it on the PPSR before releasing funds. GST treatment can differ between a dealer sale and a private sale, so check the invoicing with your accountant. Whichever route you take, getting pre-approved first means you know your budget and can move quickly, and Overdrive can arrange pre-approval across multiple lenders on one application.

Loan terms and balloon payments

Machinery finance terms typically run from 1 to 7 years, and choosing the right length is a balance between monthly cash flow and total interest paid. A shorter term means higher repayments but less interest overall and quicker ownership; a longer term lowers the monthly figure but costs more across the life of the loan. The term a lender will offer is usually linked to the age and expected working life of the machine, so newer plant can generally be financed over a longer period. A balloon payment, sometimes called a residual, is a lump sum set aside to be paid at the end of the term. Setting a balloon reduces your regular repayments because you are only amortising part of the purchase price during the term, which helps cash flow, but you then need to pay out, refinance or trade in the machine to clear the balloon at the end. Balloons are common on chattel mortgages and are worth using deliberately rather than by default. All terms and balloon options are indicative and subject to lender criteria, and Overdrive can model different structures so you can see the trade-offs clearly.

Chattel mortgage versus leasing

The two most common ways to finance machinery are a chattel mortgage and a lease, and the right choice depends on how your business is structured and how your accountant treats the asset. Under a chattel mortgage you own the machine from day one and the lender takes a mortgage over it as security; you can usually claim the GST on the purchase price upfront in your next BAS and claim depreciation and interest, which suits businesses registered for GST on an accruals basis. A finance lease works differently: the lender owns the asset and leases it to you, with GST applied to the rentals rather than the purchase price, and the lease payments generally treated as an operating expense. There are also rent-to-own and operating-lease style products for businesses that prefer to hand the machine back at the end. Each structure has different cash-flow, balance-sheet and tax consequences, so you should confirm the treatment for your situation with your accountant. Overdrive can arrange whichever structure suits, and having one application in front of more than 80 lenders means you are not locked into whatever a single bank happens to offer.

Documents and approval requirements

To finance machinery you generally need to be an ABN holder, and the paperwork depends on whether you go full-doc or low-doc. A typical application asks for your ABN and GST details, identification, and details of the machine such as the invoice or auction confirmation, make, model, year and serial number. Full-doc applications add recent financial statements and tax returns, while low-doc applications for eligible applicants may rely on bank statements or BAS instead. For larger amounts or newer businesses, a lender might ask for evidence of work such as contracts or purchase orders, plus an asset-and-liability statement. On used or private purchases, expect a valuation and a PPSR check to confirm the machine is unencumbered. Having your documents ready is the single biggest factor in a fast approval: for eligible applicants, same-day pre-approval and settlement within 24 to 48 hours may be possible once everything is in. Overdrive prepares and packages your application so it lands with the right lender in the right format the first time, which reduces back-and-forth and helps you settle quickly. Final approval is always subject to lender assessment.

Construction, agricultural and industrial machinery

Machinery finance covers a huge range of plant across construction, agriculture and industry, and lenders assess each category a little differently based on how the asset holds its value and how easily it resells. On the construction and earthmoving side, that includes excavators, wheel loaders, skid-steers, bulldozers, backhoes, graders, rollers, cranes, telehandlers and elevated work platforms. Agricultural finance covers tractors, headers and harvesters, balers, seeders, sprayers, spreaders and other farm implements, where seasonal cash flow and the strength of the used market are both taken into account. Industrial and materials-handling machinery such as forklifts, generators, compressors, CNC and workshop equipment, and processing or packaging lines is also well supported. Mainstream, well-known makes generally attract the sharpest pricing and longest terms because their resale market is deep, while highly specialised or one-off machines can be a little harder to place, both indicative and subject to lender criteria. Whatever sector you operate in, describing the machine accurately and its role in your business helps a lender get comfortable. Overdrive finances plant across all these categories and can match unusual or heavy assets to lenders that understand them.

Machinery attachments

Attachments and ancillary equipment can usually be financed alongside the base machine, and it is often smartest to bundle them into the one facility. Buckets, rippers, augers, grapples, hydraulic hammers and breakers, tilt hitches, mulchers, brooms, forks and quick-couplers for excavators and loaders are all commonly included, as are trailer-mounted and towable items that go with the plant. Financing attachments with the main machine means one approval, one set of repayments and often a better overall rate than trying to fund small items separately, since a lender is generally more comfortable advancing against a package that includes a substantial core asset. Where attachments are bought at the same time from the same supplier, they simply appear on the same invoice and are financed as part of the total. If you are adding attachments to a machine you already own, they can sometimes be financed on their own, though very small or low-value items may be harder to fund in isolation and could be priced higher. This is indicative and subject to lender criteria. Overdrive can tell you upfront how best to structure a machine-plus-attachments purchase so nothing gets left out of the finance.

Refinancing existing machinery

If you already own machinery, refinancing can free up capital or reduce your repayments. There are two common reasons to refinance. The first is to lower your rate or restructure the term on an existing loan, which can improve monthly cash flow, especially if your credit profile or trading history has strengthened since you first borrowed. The second is equity release, where you borrow against plant you own outright to inject working capital into the business, fund a deposit on another purchase, or consolidate other commitments. Lenders will value the machine and lend a proportion of that value, taking into account its age, hours and condition, with the amount available always indicative and subject to lender assessment. Refinancing does have costs to weigh, such as any payout figure on the current loan and establishment fees on the new one, so it pays to compare the total position rather than just the headline rate. Because Overdrive compares more than 80 banks and non-bank lenders on one application, Simon can quickly show whether refinancing your current machinery stacks up and, if so, which lender offers the best combination of rate, term and cash released.

Repayment examples

The following examples are illustrative only and are not quotes; actual repayments depend on the rate, term, deposit, balloon and lender assessment. On a $120,000 machine financed over 5 years at an indicative 6.99% p.a. with no balloon, repayments work out around $2,375 a month, an estimate only. A smaller $60,000 purchase over 4 years at an indicative 7.49% p.a. comes to roughly $1,450 a month, again indicative. To show the effect of a balloon, a $150,000 machine over 5 years at an indicative 6.99% p.a. would be about $2,970 a month with no balloon, but setting a 30% balloon of $45,000 lowers the regular repayment to around $2,340 a month, with that $45,000 due at the end of the term to pay out, refinance or trade in. These figures are rough estimates to illustrate how amount, term and balloon interact, not a guaranteed quote. For a genuine, tailored figure, Overdrive can run your exact numbers across multiple lenders on one application.

Machinery is a big commitment, and the right finance structure can be the difference between a purchase that strains your cash flow and one that quietly pays for itself. Whether you are buying your first excavator, adding a forklift to the warehouse, expanding an earthmoving fleet or refinancing gear you already own, it costs nothing to see where your deal is likely to price. Talk to Simon Kendrick at Overdrive, put one application in front of more than 80 banks and non-bank lenders, and get a clear, honest picture of your options with no obligation. Everything remains subject to lender assessment, but you will know exactly where you stand before you commit.