Buying equipment in a private-party sale can offer a cost-effective way to get what you require to run your business. You can save money on dealer fees, delivery charges and, most importantly, the margin vendors put on top of their equipment price.
In this article, we explain what challenges you may run into and how to pay for your privately purchased equipment.
What is a private-party sale?
A private-party sale is a transaction in which the seller is an individual, not a dealer or vendor. This can typically occur at your local yard sale or on online platforms such as eBay and Facebook Market. Businesses often take advantage of private-party sales to acquire commercial equipment.
What precautions to take?
There are certain risks associated with buying equipment from an individual. While dealers may offer warranties on your purchase, a private-party sale is final. That means it is always better to take some precautions before accepting a pricey piece of equipment “as is.”
First, check the Title. Make sure the equipment belongs to the seller, is not stolen, and fully paid off.
Ask how they purchased it. A legitimate seller should be able to show you the Bill of Sale from the time they bought that piece of equipment.
Check for loans and liens. Ask the seller to verify that there are no outstanding loans or liens with their state’s UCC.
Do not pay cash. Use a payment method that provides evidence of the sale such as check, ACH payment, or a wire transfer.
Inspect the equipment. Ensure your potential purchase’s mechanical condition is sound. Private sellers typically sell the equipment they have used but do not need anymore. They may try to hide some malfunctions to sell faster.
Can I finance equipment purchased in a private sale?
Even when you find a great deal, sometimes, large equipment purchases can be hard on your cash flow. There are two easy options to avoid a financial hit and pay for the equipment over time.
Finance right away
Once you have found some options, you can ask a lender to pre-qualify you. The lender will then quote the maximum amount available to you. After you find the right piece of equipment and agree on the price, you can call the lender to finalize the purchase.
Finance after purchase
Let’s say you did not want to miss a good deal and used your company’s cash reserves to pay for equipment. Now you want to restore the cash balance as quickly as possible. This is called “sale-leaseback”. A financial product that allows you to get back the money you have paid and only make affordable monthly payments.
Who can finance a private-party sale?
At Alliance Funding Group, we have the flexibility to offer a large variety of equipment financing structures.