Buying a business vehicle: new, demo or used?

Key points

• New: warranty and reliability, but the steepest early value loss.
• Demo or near-new: often the best balance of price and warranty.
• Used: lowest cost, but inspection and a PPSR search are essential.
• Match the finance term to how long you'll keep the vehicle.

When does new make sense?

• Very high kilometres. Couriers and long-haul operators wear vehicles out quickly; full warranty cover and reliability matter.
• Downtime is expensive. If a breakdown costs you a day's income, warranty and roadside assistance have real value.
• You need a specific spec. Factory options, payload ratings or safety features for a contract.
• Electric vehicles where battery warranty and the FBT exemption for eligible cars matter; see electric vehicle finance.

When does used make sense?

• The business is still establishing, and keeping repayments low matters more than warranty.
• Low or moderate kilometres, so wear is slow.
• Simple, proven models with cheap parts and lots of mechanics who know them.
• A second vehicle or backup where reliability is less critical.

How does finance differ?

New and demo vehicles from dealers are straightforward to finance against themselves. Used vehicles, especially older ones or private sales, can be harder with vehicle-secured finance because some financiers limit vehicle age or won't fund private sales.

That's where an unsecured business loan or a property-backed loan helps: neither depends on the vehicle's age or where you buy it. Whatever the vehicle, keep the term within the time you'll keep it. Paying for a ute you've already traded in is a classic trap.

Two illustrative examples

A mobile mechanic in Orange does about 35,000 kilometres a year and can't afford breakdowns between jobs. He buys a demo van with most of its warranty left, financed over four years. The saving on new covers a full shelving fit-out; see van finance.

A landscaper in Mandurah starting out on her own does about 15,000 kilometres a year, mostly local. She buys a five-year-old dual cab ute with a full service history for well under half the new price, after an inspection and a PPSR search. A short business loan keeps repayments low while she builds her client base; see ute finance.

How do you work out the true cost over time?

Comparing sticker prices misses most of the story. A fairer comparison looks at the total cost of owning each option for the time you'll keep it:

Divide the total by the years you'll keep it, and you have an annual cost of ownership you can compare across new, demo and used options.

In practice, the gap between new and used often narrows a lot once resale value and repairs are included. A new vehicle loses more value, but it may cost less to keep running and earn more by staying off the hoist. A used one costs less to buy, but a big repair in year two can wipe out the saving. Running the numbers for your own kilometres and work is the only way to know.

Keep the paperwork too. Service records, receipts and a clean history all lift the resale value of any vehicle, new or used, and that value is real money when it's time to change.

• Purchase price, plus on-road costs.
• Total finance cost in dollars, if you borrow.
• Running costs: fuel or charging, servicing, tyres, insurance and registration.
• Likely repairs, higher for older vehicles without warranty.
• Downtime: the income you'd lose while the vehicle is off the road.
• Resale value at the end, which you subtract from the total.

Ready to get the right vehicle on the road?

New, demo or used, we can help fund the one that suits your business. Asking us won't touch your credit file; we only talk about a credit check once you decide to go ahead. We won't spray your details to a list of lenders. A real person looks at the vehicle and the work it'll do, and calls you with options.

Please be accurate on the form about the vehicle, its price, age and who's selling it, so the first option we suggest fits. Start your vehicle finance enquiry.