Replace or repurpose? Financing machinery upgrades and attachments

What repurposing can look like

• New buckets, couplers, grapples, augers or other attachments for earthmoving and construction machines
• Implements and accessories that adapt tractors and loaders to different crops or tasks
• Technology upgrades such as guidance, telematics or control systems
• Production line modifications, tooling or software to handle a new product

Financing attachments and larger add-ons

Where an attachment or add-on is a substantial item in its own right, it can often be financed like other equipment, using structures such as a chattel mortgage, finance lease or hire purchase, with the item itself as security. Repayments can often be matched to the working life of the attachment or the machine it goes on.

Financing upgrades that can't be used as security

Software, installation, labour and some parts aren't usually acceptable as security on their own. These may be better suited to a business loan, which can be secured against other assets or unsecured. Unsecured options generally cost more than secured ones. For smaller, quicker jobs, an overdraft or line of credit may suit, though it usually carries a higher rate.

Where a project involves several parts and services, it may be possible to bundle them into one facility, keeping things simpler with a single repayment.

Comparing replace versus repurpose

When you weigh the two, consider:

• The total upfront and finance cost of each option
• Remaining life and condition of the existing machine
• Downtime while modifications are done versus waiting for a new machine
• Productivity, fuel and maintenance differences
• Resale or trade-in value of the existing machine
• How each option would be treated for tax, which is a question for your accountant

Run the numbers

Our calculators can help you estimate repayments for different amounts, terms and balloon or residual options, so you can compare a new machine against an upgrade package side by side. Results are estimates only.

General information only

This article is general information only. It does not take your personal circumstances into account and is not personal credit, legal, tax or financial advice. Talk to your accountant about how each option would be treated for tax. Funding options are subject to the asset, supplier, applicant and individual lender policy, and all finance is subject to lender assessment and approval.

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