Using Heavy Equipment Financing Wisely at Auctions

Looking to get more value in your equipment that you purchase?

If you need heavy equipment but your business is on a tight budget, then applying for a heavy equipment financing might help. 

This financing can even be used at auctions, something often overlooked when it comes to purchasing of equipment. 

Unlike the traditional sellers, auction sellers allow you to purchase an equipment at a more preferred price. This makes it ideal for businesses with limited funds.

Most of the equipment sold at auctions are sold as is. This means equipment bought will be given to the buyer in its current condition. The buyer can no longer replace or return the equipment once he has won the bid. 

Hence, bidding at auctions for the equipment can be extremely risky.

To avoid getting the worst heavy equipment for your business at an auction, I’m going to share some points to consider before proceeding to make a bid. 

Identifying “Red Flags” When Buying Heavy Equipment at Auctions

Once you have acquired your heavy equipment financing, it is time to use it wisely. 

Bidding at auctions open a lot of opportunities, but at the same time, expose you to various scams and frauds. 

Make sure to follow the tips that are shared in this post to help you avoid pitfalls during auctions.

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What is Equipment Financing?

Equipment financing is the process of getting additional capital for the purpose of acquiring equipment. The convenience and flexibility it offers attract companies to begin using it, particularly when it comes to acquisitions of fixed assets. 

 

In fact, many businesses that operate with heavy machinery often opt to use equipment financing. 

 

How does it work? 

The company that needs to borrow the capital will send an application to the financier. Once it has been approved, an arrangement will be created. 

The contract, in most cases, state that the financier retains title to the acquired equipment, and payment for the borrowed capital must be given on an installment basis.

 

Choosing to acquire equipment financing instead of using existing capital can give your business a big lift in the long-run. 

 

However, there are still things you need to consider before acquiring equipment at auction. 

 

Things to Consider Before Acquiring Equipment at Auction

If you have insufficient capital to replace or purchase new heavy equipment, then heavy equipment financing will be your best bet. 

However, it needs to be used wisely to guarantee that you get the best value for your money and business. 

 

How to Avoid Pitfalls When Acquiring Heavy Equipment at Auctions

Buying used equipment at auctions can be beneficial. However, it doesn’t mean that you’re free from all the risks and scams that may happen during the buying process. To avoid the worst possible outcomes of your auction bidding, consider following these tips: 

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Inspect The Heavy Equipment First

Most used heavy equipment in auctions are sold in the condition they are seen in. This makes it possible for potential bidders to inspect them before making the bid, an important step to remember in auctions. 

It’s advisable to have a qualified mechanic or experienced operator with you to conduct the inspection.

But if you’re viewing equipment in an online auction, ensure that the information provided is complete and that pictures are shown.  Try to make sure you only rely on websites that provide complete information, and pictures of every single part of the equipment is shown. 

Ask for The Maintenance Record

Never purchase an equipment that has a long recorded history of repairs. 

Ensure that the equipment is in good condition and well maintained. The only way to do it is by asking for its maintenance record.

The maintenance record will give you signs and clues of how the previous owners have used the heavy equipment. Doing this will help you avoid getting equipment that needs frequent repairs. 

Signs of Wear

When you’re checking used heavy equipment, it is not at all uncommon to come across scratches or signs of wear. 

Dismiss the equipment when it is beginning to display hairline cracks, rust, or damage that could be a major financial burden in the future.

The Equipment Must Have a Clear Title at The Time of Purchase

Once you have found a heavy equipment that is in good condition, make sure that it is free from any liens before paying. 

Ask the seller for a document showcasing proof that they have a clear title on the equipment to avoid any legal problems. 

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Common Scams to Avoid at Auction

A lot of great deals are found on the Internet, which is why most business owners would rather conduct their purchases online. However, the vulnerability of the Internet makes it possible for frauds and online scammers to be present and victimize unknowing individuals. 

To ensure that the purchase you are making is legitimate, here are some tips to avoid the common scams at online auctions.

  1.   Never send money if the seller or the owner of the heavy equipment is asking for a wire transfer. Wire transfers give you no protection whenever your deal with the seller goes bad.
  2.   Be cautious whenever the seller prefers to use escrow. It’s the common and easiest way for scammers to get money from their clients. 
  3.   Online sellers with a good reputation and high credibility are prone to hacks and impersonations. Verify the seller before making a deal.
  4.   Choose the best option for payment methods. Opt to use credit cards for more protection. 
  5.   Keep in mind that the website that hosted the auction is not liable for anything. They are simply providing the platform for the sellers and buyers to conduct transactions. If a deal goes wrong, you cannot count on them to provide refund.
  6.   If you’re new to auction sites, always start with a small bid.
  7.   Be cautious if the seller told you to take the transaction offline. Many online sellers are putting advertisements of equipment that they don’t actually have. When a buyer makes a bid, the seller will then ask to continue the deal offline so they can communicate directly and persuade them to send the payment via wire transfer. 
  8.   It’s time to walk away from a deal once you notice that something is wrong. When a deal seems too good to be true, there’s a high possibility that you’re dealing with a scammer. 

Final Thoughts on Red Flags to Avoid on Heavy Equipment Financing

In this blog post we talked about how heavy equipment financing can help you purchase or acquire the heavy equipment you need for your business. You can use it to make your purchases in any method you please, even if it means participating in an auction.

Although great rates can be expected in an auction, it’s important to be mindful of the equipment that you are buying. 

Make sure to conduct a thorough inspection for any signs of major wear and tear. It is recommended to request for its maintenance record to give you a clearer insight on its condition. Most importantly, ensure that the seller is the owner of the equipment to avoid any legal problems. 

The risks can be even greater when participating in an auction that is conducted through the Internet. The anonymity and freedom the Internet offers makes it possible for scammers and frauds to flourish, particularly in auctions. 

If you have questions or want to know more about heavy equipment financing, you may reach Trust Capital USA at (866) 458-4777.

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Article: Using Heavy Equipment Financing Wisely at Auctions

 

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