Can I finance used or second‑hand equipment?

Short answer

Yes — many UK businesses can finance used or second‑hand equipment through a variety of asset finance and lending options. Lenders assess the asset’s type, age, condition and resale value, and some products are specifically designed for pre‑owned equipment.

How financing used equipment works

Financing used equipment follows similar principles to financing new assets but with extra attention on valuation and residual value. Lenders typically want independent valuations or recent invoices to confirm condition and market worth.

Common structures include hire purchase, finance leases, chattel mortgages and asset refinance arrangements. Under hire purchase you pay over time and usually become owner once the balance is settled, while finance leases let you use the asset for an agreed term without transferring ownership.

Lenders consider the equipment as security and price transactions to reflect the likely lifespan and resale value of the second‑hand item. This means interest rates, deposits and maximum loan-to-value (LTV) ratios can differ from new‑asset finance.

Types of finance suitable for second‑hand equipment

Hire purchase (HP) is commonly used for used equipment because it combines ownership at the end of the term with predictable monthly payments. HP agreements are straightforward and often accepted by lenders for quality second‑hand assets.

Finance leases are an alternative for businesses that prefer not to take ownership immediately or that want a lower initial outlay. With a lease you return the asset at term end, renew the lease, or sometimes buy the item at its residual value.

Chattel mortgages and asset refinance solutions suit companies that already own equipment but need to free up cash. Asset refinance uses the existing equipment’s value to raise funds while ownership remains with the borrower.

What lenders look for when assessing used equipment

Lenders focus on the asset’s type, age, working hours (for plant and machinery), maintenance history and any refurbishment. Assets with a well‑documented service history and recent inspection reports typically secure better terms.

Some lenders set strict age or condition limits; for example, plant and agricultural machinery may need to be under a certain number of years or within a defined percentage of its expected useful life. Specialist or high‑value second‑hand items (medical kit, commercial vehicles, printing presses) may attract more flexible lending if they hold market value.

Valuations and warranties reduce lender risk. Providing a clean valuation, photos, service logs and guaranteed access for inspection speeds decisions and can lower required deposits or interest margins.

Pros, cons and practical considerations

Financing second‑hand equipment often saves capital expenditure and delivers quicker ROI than buying new. Lower purchase prices and the ability to preserve working capital are strong advantages for many SMEs and asset‑intensive firms.

Downsides include shorter remaining useful life, higher maintenance costs and potentially lower lender LTVs or higher rates. Warranty gaps and uncertain resale values can increase the overall cost of ownership compared with new equipment with manufacturer guarantees.

VAT, insurance and tax treatment are also important. In the UK, VAT handling depends on the finance type and whether you are VAT‑registered; always check with your accountant if VAT recovery applies to the transaction.

For tailored guidance on funding a specific piece of equipment and the finance structures available, see our dedicated equipment finance page: equipment finance.

How to improve your approval prospects and next steps

Prepare clear paperwork: recent accounts, proof of trading, asset invoices, maintenance records and independent valuations. A tidy application reduces friction and helps matching systems and lenders assess risk quickly.

Be ready to explain how the equipment will support revenue, margin or cost savings, and provide forecasts showing affordability of repayments. Lenders favour borrowers who show a credible plan to generate returns from the asset.

Best Business Loans connects you with lenders and brokers experienced in used equipment deals and can run a Quick Quote or Decision in Principle to check likely eligibility. We do not provide finance directly; instead our platform matches your enquiry with relevant, regulated providers so you can compare options and decide.

Key takeaways

Yes — used equipment can be financed, but terms depend on the asset’s condition, age and resale value. Choosing the right finance product (HP, lease, chattel mortgage or refinance) and supplying clear documentation improves outcomes. Start with a Quick Quote to see likely matches and next steps.

How Best Business Loans helps

We use AI matching to connect UK businesses with lenders and brokers who actively fund second‑hand equipment. It’s free to submit a Quick Quote and we’ll introduce you to suitable providers so you can compare terms and progress applications confidently.

Please note: Best Business Loans operates as an independent introducer and does not supply loans or make lending decisions. Any finance product you progress will be offered by a regulated lender or broker and subject to their terms and eligibility checks.

Frequently asked questions

Can I finance older machinery?

Sometimes — lenders set age or remaining useful life limits and may require valuations or lower LTVs for older machinery. Specialist lenders exist for higher‑age assets in sectors like agriculture and construction.

Do I need a deposit for used equipment?

Often a deposit or initial contribution is required, especially where LTVs are lower for second‑hand assets. The deposit level varies with asset type, condition and borrower credit profile.

Will financing used equipment affect tax?

Tax treatment depends on the finance type and your business structure. Capital allowances, VAT recovery and accounting treatment vary, so consult your accountant or tax adviser for specific advice.

If you’d like an instant check, submit a Quick Quote now and get matched to lenders who fund used equipment. It’s a fast, no‑obligation way to get a Decision in Principle and understand potential costs.