Quick answer
For a sale and leaseback, financiers value equipment at what it would realistically sell for today, not what you paid. They look at recent sale and auction prices for similar assets, the age, hours or kilometres, condition and service history, and how easy it would be to resell. They then fund a portion of that value. Clear title, good records and mainstream equipment lift the figure.
Key points
- The starting point is today's realistic resale value, not the purchase price or book value.
- Recent sale and auction prices for similar assets drive most valuations.
- Hours, kilometres, condition and service history move the number up or down.
- Financiers fund a portion of the value, so the cash released is less than the valuation.
- Clear title, complete records and mainstream equipment get the best result.
Financiers value equipment for a sale and leaseback at what it would realistically sell for today. They look at recent sale and auction prices for similar assets, then adjust for age, hours or kilometres, condition, service history and how easy it would be to resell. The cash released is a portion of that value, so knowing how the number is built helps you plan.
A sale and leaseback can turn trucks, loaders, presses or kitchens your business already owns into working capital, while the equipment stays right where it is. The question every owner asks first is “how much will I get?” The honest answer is: it starts with a valuation, and the valuation starts with the market.
What is the financier actually trying to work out?
One thing: if the business stopped paying and the financier had to take the equipment back, what would it get for it, and how quickly?
That’s different from what you paid, what it’s insured for or what’s in your accounts. It’s a resale question. A sale and leaseback is the financier buying your asset, so it values it the way any careful buyer would, with a little extra caution because it may need to sell it in a hurry one day.
Which factors move the number?
| Factor | Pushes value up | Pushes value down |
|---|---|---|
| Type of asset | Mainstream trucks, trailers, loaders, excavators, forklifts | Bespoke, fixed or highly specialised equipment |
| Age | A few years old, current model | Near the end of its working life, superseded model |
| Usage | Low hours or kilometres for its age | High hours, heavy-duty or harsh-site use |
| Condition | Clean, well maintained, no leaks or damage | Visible wear, damage, missing parts |
| Records | Full service history, invoices, manuals | No logbooks, unknown history |
| Title | Owned outright, clear PPSR | Unclear ownership, unexplained registrations |
| Market | Active auction and dealer market | Few buyers, long time to sell |
Mainstream assets matter most. A tipper truck or a 20-tonne excavator can be sold almost anywhere in Australia within weeks. A custom-built production line might have a handful of buyers worldwide. Our guide to specialised equipment and resale value explains why lenders treat the two so differently.
How do financiers arrive at the figure?
There are three common approaches, and many financiers use more than one.
Market comparison. For common vehicles and machinery, financiers look at recent auction results, dealer listings and their own sales data for the same make, model and year. This is fast and usually the basis for smaller deals.
Desktop valuation. A valuer reviews photos, serial numbers, hours and service records without visiting. It’s common for mid-sized deals where the asset type is well known.
Physical inspection. For larger, older or more specialised assets, an independent valuer inspects the equipment on site, checks it runs, and reports on condition and resale prospects.
Valuers often report more than one figure, such as a fair market value and a lower figure reflecting a quicker or forced sale. Financiers lean towards the more conservative number, then fund a portion of it.
Why isn’t the valuation what you paid, or what’s in your books?
Three reasons.
The price you paid included things buyers won’t pay for again. Freight, installation, custom fittings and dealer margin are real costs but rarely add to second-hand value.
Equipment loses value as it’s used. business.gov.au notes, in its comparison of leasing or buying vehicles and equipment, that bought vehicles depreciate and that equipment exposed to fast-changing technology can lose value quickly.
Your books follow tax rules, not markets. The written-down value in your accounts reflects depreciation claimed under ATO rules, and assets may have been written off in full. The ATO’s instant asset write-off guidance explains how eligible assets under $20,000 can be deducted in the year they’re first used or installed. A machine worth $18k on the market might be worth nothing in your books. That gap matters for tax when you sell, so ask your accountant before you sign.
If you want to see what your equipment could realistically release before paying for a valuation, send us a short enquiry. There’s no credit check when you first enquire.
How can you get the most realistic valuation?
You can’t change the market, but you can remove doubt, and doubt always costs money in a valuation.
- Gather the records. Purchase invoices, service logbooks, major repair invoices, operator manuals and any compliance certificates.
- List serial numbers, hours and kilometres for every asset you’re offering.
- Clean it and service it. A valuer who sees a clean, freshly serviced machine with no leaks assumes it’s been looked after.
- Fix the small, visible things. Lights, glass, seats, guards and worn consumables. Leave big rebuilds unless a valuer says they’d pay off.
- Group assets sensibly. Offering a fleet of matching trucks together can be more attractive to a financier than one old unit on its own.
- Prove clear title. Run a PPSR search on your own business before the financier does. The register notes that a search costs a few dollars online and shows whether a security interest is registered (PPSR and high-value goods). Old registrations from loans you’ve already repaid should be removed before settlement.
What happens between valuation and cash in the bank?
Once the valuation is in:
- The financier confirms how much it will pay, usually a portion of the valuation.
- Any existing finance on the assets is identified, and payout figures are requested.
- The lease terms are set: payment, term and what happens at the end, often a residual that lets you buy the equipment back.
- At settlement, the financier pays out any existing lender, removes old registrations, registers its own interest and pays the balance to you.
- You keep using the equipment and make the lease payments.
If the amount released isn’t enough on its own, it can be combined with other funding. Unsecured and cash-flow options for trading businesses typically run from $5k to $500k, and property-secured business loans run from $20k to $5m. The working capital loans page explains how those are assessed.
An illustrative example
Illustrative only. A civil earthworks business owns a wheel loader, two excavators and a tipper truck outright. It wants to release cash for a deposit on a large subdivision contract.
The owner’s books show the fleet almost fully depreciated. The financier’s market comparison puts the four assets at around $380k combined. One excavator is older with high hours and no service records, so the valuer marks it down sharply. The owner pulls together logbooks for the other three, gets a minor hydraulic leak fixed on the loader, and runs a PPSR search that reveals an old registration from a loan paid off two years ago. The old lender removes it within the week.
The financier agrees to buy the loader, the newer excavator and the truck, leaving the older excavator out, and leases them back over four years. The owner’s accountant works out the tax on the sale before settlement, so there are no surprises at tax time. The yellow goods finance page covers how earthmoving equipment is usually funded if the contract needs more machines.
Wondering what your equipment could release? Let’s find out
You’ve already paid for the gear in your yard. A sale and leaseback simply lets it fund the next step, as long as the valuation and the lease make sense for your business.
The enquiry takes about 60 seconds, and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders, so you won’t be fielding calls from strangers. A real person looks at what you own, what it’s likely worth and what you need the cash for, then calls you. Please fill the form in accurately, including the make, model and age of the main assets, so we can match the right option first time.
Frequently asked questions
Who values equipment for a sale and leaseback?
It depends on the financier and the asset. For common vehicles and machinery, many rely on market data, auction results and dealer pricing. For larger or specialised equipment, they often ask an independent valuer to inspect it. Ask early who will value it and who pays for any inspection.
Why is the valuation lower than what I paid?
Equipment usually loses value from the day it's delivered, and the financier is looking at what it could sell for if it ever had to. Freight, installation, customisation and dealer margin are part of what you paid but rarely add to resale value.
Is the valuation the same as the written-down value in my accounts?
No. The written-down value reflects tax depreciation, which follows ATO rules and effective lives. Market value reflects what buyers will pay. The two can be very different, especially for well-maintained machines that hold their value or assets you've written off instantly.
Can I get a better valuation by fixing things first?
Sometimes. Minor repairs, a full service, a clean and replacing worn consumables can lift both the value and the valuer's confidence. Major repairs rarely pay for themselves, so focus on what a buyer would notice first.
Does finance owing on the equipment affect the valuation?
Not the valuation itself, but it affects what you receive. Any amount owing is paid out of the proceeds at settlement, and the existing lender's PPSR registration has to be removed so the new financier gets clear title.
Can a fit-out or fixed equipment be used in a sale and leaseback?
It's harder. Fit-outs and equipment bolted into premises are difficult to remove and resell, so many financiers won't include them or will give them little value. Mobile and mainstream equipment works best.