When you apply for equipment finance, one of the first things a lender looks at is not your credit score or your income. It is the asset itself. What it is, how old it is, and how easy it would be to sell if they had to. That assessment determines everything else.
Lenders divide assets into three broad categories: primary, secondary, and tertiary. Where your asset sits in that system shapes the rate you will pay, how long a loan term you can get, which lenders will even consider your application, and how much paperwork is involved.
Most people find this out after they apply. This article explains it before you do.
Why This Matters Before You Apply for Anything
Here is what happens when a business owner does not know which tier their asset sits in. They search online, find a lender whose website looks credible, and apply. They get declined, or offered terms that are much worse than they expected, because they applied to the wrong lender for their asset type. Then they apply somewhere else. And maybe somewhere else again.
Every application creates a mark on your credit file. Multiple applications in a short period of time signal to lenders that you are struggling to get approved. That can make your situation harder, not easier, and can result in worse terms than you would have received if you had started in the right place.
A business buying a new Isuzu truck, a business buying a ten-year-old Komatsu excavator, and a business financing a commercial kitchen fit-out are all doing “equipment finance.” But they are talking to different lenders, at different rates, over different term lengths, with different documentation requirements.
The business owner who knows this before they start goes to the right lender first. The one who does not ends up with more credit enquiries on their file, a longer process, and often worse terms than they needed to accept.
The One Number That Catches People Off Guard: End-of-Term Age
This is the most common thing that surprises people when they are financing used equipment.
Most lenders set a limit on how old a secondary asset can be at the end of the loan. For many lenders this is 15 years. That sounds straightforward, but the implication is significant.
Say you are financing an excavator that was built in 2015. In 2026 it is already 11 years old. With a 15-year limit, you can only finance it over a maximum of four years. A four-year term on a large piece of equipment means much higher monthly repayments than a ten-year term would. That changes the affordability of the whole deal and needs to be factored in before you commit.
Before you finance any used equipment, subtract its current age from the lender’s maximum end-of-term age. The result is the longest loan term available to you. If that term produces a monthly repayment your cash flow cannot comfortably absorb, you need to know that before you apply, not after.
What Happens When No Standard Lender Will Help
Sometimes the asset really falls outside what mainstream lenders will finance. The business is too new. The asset is too specialist. The ABN registration is less than a year old. The equipment is in a category that mainstream lenders avoid.
This is where rent-to-buy products come in. Rather than borrowing money to buy equipment outright, you rent it for a set period and then have the option to buy it at a reduced price at the end. You pay a small amount upfront, then a monthly rental fee, and at the end of the term you can purchase it, keep renting, or return it.
The advantages are real. The rental payments are generally tax-deductible. You are not committing to ownership upfront. The asset does not appear as a loan on your balance sheet. And you can qualify with a newer ABN than mainstream lenders require.
The trade-off is that the total cost of renting to own is typically higher than financing to own from the start. A broker can model both scenarios for you so you are comparing real numbers before you decide. Your accountant can help you understand the tax implications of each.
A Simple Way to Think About It
| Asset type | What it means for your loan | What to focus on |
|---|---|---|
| New equipment from a mainstream brand | Best rates, longest terms, widest lender choice. This is where competition is strongest. | Your credit score and whether you own property. These are the main levers on the rate you will pay. |
| Used equipment with good resale value | Higher rates, shorter maximum terms, fewer lenders. Age of asset at end of term is the key constraint. | Calculate end-of-term age before you apply. Make sure the resulting repayment fits your cash flow. |
| Specialist or older equipment | Highest rates, most restricted lender pool. Some mainstream lenders will not touch these at all. | Work with a broker who knows which specialist lenders are active in your specific asset category. |
| Business too new for mainstream lending | Mainstream lenders may decline. Rent-to-buy or specialist products are the realistic path. | Compare the total cost of renting to own vs waiting until you qualify for mainstream finance. |
Does Owning Property Make a Difference?
Yes. It makes a significant difference.
Most equipment finance lenders offer better rates to applicants who own property, because the property provides additional comfort for the lender. If things go wrong, there is something behind the loan. Most lenders also accept property owned by your spouse, with the right documentation.
If you do not own property, you can still access equipment finance. You may need a larger deposit, a stronger credit profile, or a longer trading history to get comparable terms. And for tertiary assets in particular, property backing moves from being helpful to being almost essential with most lenders.
Where Does This Leave You?
Before you approach any lender for equipment finance, it helps to know three things:
1. What tier your asset sits in.
2. Whether the end-of-term age limits the loan term in a way that affects your repayments.
3. Whether your credit profile and property status will put you in the most competitive rate tier, or whether there is work to do first.
Part 2 of this series goes into how pricing actually works, the difference between buying from a dealer versus a private seller, and practical steps to improve the terms available to you before you apply.
Frequently Asked Questions
Think about how easy it would be to sell that piece of equipment tomorrow. A new ute from a well-known brand: easy to sell, good market, clear price. That is primary. A ten-year-old truck in reasonable condition: sellable but a smaller market and more variables. That is secondary. A commercial coffee machine or a fit-out: valuable to you but hard for a lender to sell quickly to someone else. That is tertiary. If you are not sure, ask a broker before you apply anywhere.
End-of-term age is how old your equipment will be when the loan finishes. Most lenders cap this. For used equipment, if you are close to that cap, you may only be able to take a short loan term, which pushes up your monthly repayments. A simple example: equipment that is already 12 years old, with a 15-year cap, can only be financed over three years. Always check this before you commit to a purchase.
Yes. Most lenders offer meaningfully better rates and higher loan amounts to property owners because the property gives them additional security. This applies even if the property is in your spouse’s name, as long as the right documentation is provided. If you do not own property, it is not a barrier to getting finance, but it does affect what you will pay and which lenders will consider you.
Mainstream equipment finance lenders typically want to see at least two years of ABN registration. If you are newer than that, your options narrow but they do not disappear. Some specialist lenders and rent-to-buy providers work with newer businesses. The terms will generally be more conservative and a deposit is usually required. A broker can identify what is realistically available for your specific situation.
Yes. Most lenders will finance equipment from private sellers as well as dealers. The difference is in the terms. Private sales generally attract a slightly higher rate or a lower maximum loan-to-value ratio compared to dealer sales. An inspection by an accredited inspector is also required for most private sales to verify the asset’s condition and value. Part 2 of this series covers the dealer versus private sale comparison in detail.
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