With high costs of living and running a business dominating the headlines and minds, keeping expenses under control may be a major priority for 2024. For operators needing to replace equipment or purchase new units to expand the business, purchasing second-hand rather than new may be a cost-effective decision. Auctions are a popular way to purchase second-hand units but arranging the financing for auction buys can be different from buying through a dealer and can have some complexities. We assist operators through those complexities with our comprehensive used machinery loan services.
Used Equipment Acquisition Considerations
For many businesses, quality second hand equipment can present an extremely cost-effective acquisition compared with purchasing brand new units. But there are a number of factors to keep in mind when financing is required to make the purchase.
Second-hand equipment credit may attract different interest rates and lender conditions than credit for new units. Lenders take into account the age and condition of second-hand assets when preparing lending offers. We can provide quotes on both new and second-hand options to allow comparisons to assist purchase decisions.
Consideration should be given to the amount of the balloon, residual or buy back to reflect the value of the unit at the end of the credit term to avoid owing more on the unit than it is worth.
A different approach to financing may be preferred when buying at auction compared with buying from a dealer or private seller. Auction purchases are made on the day with many houses requiring prompt settlement. Bidders need to have the funding confirmed or be confident of securing it within the settlement timeframe. When buying from a dealer or private seller, there can be an opportunity to inspect the goods then arrange funding before making that final commitment.
Timing can be a major consideration, especially when buying at auction. There is likely only one of the units being offered. When sold, that’s it. Bidders can need to be prepared. Using our broker services can provide pre-approved credit and expedite the funding process to assist customers from missing out on quality buys.
Used Machinery Loan Products
The same commercial credit facilities can be selected to fund both new and second-hand equipment, purchased from dealers or at auction, subject to lenders accepting the goods as suitable funding security. These are Rent-to-Own, Lease, Commercial Hire Purchase and Chattel Mortgage.
While there is the same selection process – suitability to accounting methods, tax and balance sheet, the rates, terms, approved amount and conditions may be different for second-hand compared with new. As mentioned above, lenders assess the assets when assessing the application. That assessment can influence the credit amount approved, interest rate offered, balloon/residual approved and the term.
Where the goods are not considered suitable security, we provide affordable unsecured credit equipment options which may be a cost-effective solution.
Funding is available for second-hand units from leading brands used in many industries including construction, mining, agriculture, farming, forestry and others. Brands such as CAT, Komatsu, John Deere, Kuboto, Bobcat, Case and many others.
Keeping Costs Down with Lower Used Machinery Loan Interest Rates
With a key priority of keeping costs down by purchasing second-hand rather than new, operators can focus on achieving the lowest rates on the funding. Jade Equipment Finance supports business owners to keep their operating costs under control with lower used machinery loan interest rates. Our brokers handle the sourcing, negotiating and structuring credit to best suit individual specifications and objectives.
Interest rates on second-hand units are subject to the lender assessment of the goods as well as the credit profile of the business operation and with some small entities, the owner’s financials. Rates can also vary across the lending market.
With our access to a large number of lenders, including our specialist heavy equipment lenders, we have the resources and capabilities to deliver the best rates. Rates that can provide a payment plan that works with cash flow and delivers expected ROI over the life of the equipment.
While all rates are individually quoted, operators may use our current best commercial equipment rates on new asset acquisition funding as a general guide.
Securing Used Machinery Loan for Auction Purchases
When planning to buy at auction, operators have a key decision to make – arrange funding before the auction or after successfully bidding?
Arranging funding through to the approved stage can provide advantages. It can give buyers the confidence to bid to their approved limit and may avoid purchasing beyond the approved credit limit. With funding already approved, buyers may avoid missing out on quality goods.
In order to get as exact quote and offer as possible with pre-approved credit, buyers will need to provide as with as much detail as available on the goods – the specifics of the equipment as per the auction house catalogue. If not known, a credit limit may be approved subject to offers being amending when details of the goods are known post-purchase.
If planning post-auction funding, our 24 hour approval timing can assist buyers meet auction house settlement timings.
Whatever your preferred way to approach funding equipment bought at auction, we can assist with the appropriate products, low rates and expert services.
Contact Jade Equipment Finance on 1300 000 003 to discuss pre-arranging a used equipment loan to buy at auction.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.