New vs Used Equipment Finance: Which Saves More Money?
A Practical Guide for Australian Businesses
The choice between new and used equipment isn’t just about the purchase price. Interest rates, term length, GST refunds, tax deductions, downtime and resale value all change the real cost dramatically.
This plain-English comparison shows exactly where the savings (or hidden expenses) lie.
New vs Used – The Full Picture
| Factor | New Equipment | Used Equipment |
| Purchase Price | Full retail | Typically 20–60 % lower |
| Interest Rate (fixed) | 6.5 % – 9.5 % | 8.0 % – 14 % or higher |
| Maximum Term | Up to 7 years | Usually 3–5 years |
| Deposit Required | Often 0 % | Commonly 10–30 % |
| GST Refund (chattel mortgage) | Full 1/11th straight away | Full 1/11th (unless private sale GST-free) |
| Residual/Balloon | Up to 50 %+ | Usually 0–20 % |
| Approval Speed | Same or next day | Slower – valuations often needed |
| Warranty & Reliability | Full factory coverage | Limited or none |
| Resale Value Later | Higher absolute value | Lower, but percentage loss is smaller |
The Interest Rate Gap Hurts Used Buyers
New equipment attracts the lowest rates because lenders can easily value and repossess it.
Used equipment carries more risk, so rates jump 2–5 % higher. On a $300,000 loan that difference can add $40,000–$80,000 in extra interest over the term.
Real Example – $400,000 Excavator (Chattel Mortgage)
| Item | New ($400k inc GST) | Used 3 yo ($260k inc GST) |
| GST reclaimed next BAS | $36,364 | $23,636 |
| Amount financed | $400,000 (0 % deposit) | $260,000 (or $234k with 10 % deposit) |
| Rate | 7.4 % | 10.9 % |
| Term + balloon | 60 months + 25 % | 60 months + 10 % |
| Monthly repayment | ≈ $6,150 | ≈ $5,280 |
| Total interest paid | ≈ $78,000 | ≈ $82,000 |
| Likely repair/downtime cost | Very low | $20k–$80k over term |
| Resale after term | ≈ $180k–$220k | ≈ $100k–$130k |
In most cases the “cheaper” used machine ends up costing the same or more once interest and repairs are added.
When New Wins by a Mile
- The machine earns your income every day (zero tolerance for breakdowns)
- You want the lowest rate, longest term and biggest balloon
- Full warranty and latest safety/technology features
- Maximum tax deductions and Instant Asset Write-Off eligibility
- Dealer subsidised finance (often 0–4 % on new stock)
- Stronger resale or trade-in value later
Best for: civil contractors, transport operators, medical centres, cafés and restaurants.
When Used Can Actually Save Money
- Cash flow is tight and you need the lowest possible monthly payment now
- You have your own mechanics and are comfortable with maintenance risk
- You find a genuine private-sale bargain (especially GST-free)
- The asset depreciates slowly (some trucks, trailers, basic plant)
- You intend to run it until it’s worthless
Best for: experienced owner-operators, subcontractors, regional businesses with workshop capability.
Private Sale vs Dealer Used – Another Big Factor
Dealer/Auction used
→ Same GST refund as new
→ Slightly higher rates than brand-new
→ Reasonable terms and fast approval
Private sale used
→ Often no GST payable (huge saving)
→ Much higher rates + bigger deposit
→ Many lenders refuse assets over 10–12 years old
Smart Ways to Keep Costs Down (New or Used)
- Get finance quotes for both new and used versions of the same asset.
- Use a broker with bank and private lenders – banks prefer new, private lenders are more flexible on used.
- Include realistic repair and downtime costs in your spreadsheet.
- Ask dealers about current low-rate campaigns – new can sometimes be cheaper per month than used.
- Set the residual to match how long you’ll actually keep it.
The Bottom Line
For most growing Australian businesses, new equipment financed through a low-rate chattel mortgage with a healthy balloon is cheaper and far less stressful over the full ownership period.
Used equipment only wins when you buy the right asset at a sharp price, accept the extra risk, and still secure decent finance terms.
At Finance Finance Finance we run both new and used scenarios across 40+ lenders so you see the true after-tax, after-interest cost before you sign anything.
Want to know which option actually saves you more on your next purchase? Contact us for a free side-by-side comparison.
