The tractor isn’t sitting in a dealership.
It’s sitting on another farmer’s property.
The seller wants:
$145,000.
You’ve inspected it.
The hours look reasonable.
The service history is available.
You’ve agreed on the price.
Now there’s one problem.
You need finance.
And the seller says:
“I’ve never sold machinery to someone using finance before. How does this actually work?”
Buying business equipment privately can be very different from walking into a dealership and purchasing machinery from an established equipment supplier.
Private-sale equipment can potentially be financed in some circumstances.
But before money changes hands, there may be additional work required around:
the seller,
the equipment,
ownership,
identification,
valuation,
documentation,
and settlement.
For a business owner, the important thing is understanding that finance approval and settlement are not the same thing.
A Tara Contractor Finds the Tractor He Wants
Consider an agricultural contracting business operating around Tara and surrounding parts of regional Queensland.
The business provides contracting services to farming and rural customers and has been operating for eight years.
The owner wants another tractor to increase capacity during busy periods.
He isn’t particularly interested in buying brand new.
He has been watching the used market and finds a suitable machine advertised privately.
The tractor is six years old.
Approximately:
4,200 hours.
Asking price:
$152,000.
After inspecting the tractor and negotiating with the owner, they agree on:
$145,000.
The seller is another business owner.
There is no equipment dealer involved.
The buyer calls Thrive Broking and says:
“I’ve found the tractor. Can you finance a private sale?”
The answer isn’t automatically:
yes.
And it isn’t automatically:
no.
The transaction needs to be looked at properly.
First Question: Who Actually Owns the Tractor?
This sounds obvious.
But it matters.
If you’re buying equipment privately, the lender may need to be satisfied that the person or entity selling the asset has the right to sell it.
Imagine the advertisement is under:
John Smith.
But the tractor is actually owned by:
Smith Farming Pty Ltd.
Or perhaps:
a family trust.
Or:
another company in the seller’s group.
That needs to be clarified.
The Seller’s Name Matters
Before assuming the transaction is ready for finance, establish:
who owns the equipment
and
who is receiving the sale proceeds.
If the seller details don’t line up, that may need to be resolved before settlement.
Second Question: Is There Finance Owing on the Equipment?
The seller says:
“I own it.”
That doesn’t necessarily mean:
there is no finance attached to it.
Perhaps the tractor was originally financed and there is still:
$48,000
owing.
That doesn’t necessarily prevent a sale.
But it changes the settlement.
You Don’t Want to Pay $145,000 and Discover Someone Else Has Security Over the Tractor
Appropriate searches and verification may be required as part of the transaction.
Where existing finance or a registered security interest is involved, the payout and release process may need to be addressed.
The exact requirements depend on the transaction and lender.
A Private Sale Can Involve More Than One Payment
For example, suppose:
Purchase price:
$145,000.
Existing finance payout:
$48,000.
Balance to seller:
$97,000.
The settlement process may need to account for the existing financier and the seller rather than simply transferring:
$145,000
straight to the seller.
Don’t attempt to structure that yourself based on an assumption.
The lender’s settlement requirements need to be followed.
Third Question: Can the Tractor Be Properly Identified?
The lender needs to know what asset is being financed.
For equipment, that can involve details such as:
make,
model,
year,
serial number,
VIN where applicable,
engine number where relevant,
and other identifying information.
The required identifiers depend on the equipment.
“2019 Tractor” Isn’t Enough
Suppose the buyer sends:
“It’s a 2019 John Deere. $145k.”
That’s a starting point.
But it may not be enough to progress the transaction.
Get the full asset details.
Why Identification Matters
The finance is being provided for:
a specific asset.
Not:
a generic tractor.
The equipment described in the sale documentation needs to match the equipment being financed.
Fourth Question: Is the Price Reasonable?
Private sellers set their own prices.
Sometimes the price is excellent.
Sometimes it isn’t.
Suppose the seller wants:
$145,000.
Comparable equipment appears to be selling around:
$135,000 to $155,000.
The agreed price may appear commercially reasonable.
Now imagine the seller wants:
$210,000
for equipment that appears to have a materially lower market value.
That can create a different finance conversation.
Finance Doesn’t Automatically Validate the Purchase Price
A buyer can agree to pay whatever they want.
That doesn’t mean a lender will necessarily fund the entire amount.
Depending on the asset and transaction, valuation or other evidence of value may be required.
Related-Party Sales Need to Be Disclosed
Suppose the private seller is:
the buyer’s father,
business partner,
related company,
or another connected party.
Don’t present that as an ordinary arm’s-length private sale.
Tell the broker.
Related-party transactions can be treated differently and may require additional consideration.
Fifth Question: What Documentation Can the Seller Provide?
A dealer regularly sells equipment.
They usually have established:
invoicing,
sales,
and settlement processes.
A private seller may not.
That’s where preparation matters.
Depending on the transaction, documentation may need to establish:
seller details,
buyer details,
equipment details,
purchase price,
and other relevant sale information.
Don’t Send $20,000 Because the Seller Says Someone Else Is Interested
This is where private purchases can become uncomfortable.
The tractor is advertised online.
The seller says:
“I’ve got another buyer coming tomorrow. Transfer me $20,000 tonight and I’ll hold it.”
The buyer doesn’t want to lose the machine.
So there is pressure to move.
But before sending a significant deposit, understand:
the sale terms,
whether the deposit is refundable,
whether finance is required,
and what happens if finance doesn’t proceed.
Finance Approval Shouldn’t Be Assumed
Finding the right machine doesn’t guarantee:
the finance will be approved.
And agreeing to buy the equipment doesn’t oblige a lender to fund it.
If finance is required to complete the purchase, that needs to be considered before entering commitments you cannot comfortably meet without it.
The Seller May Need to Wait
Private sellers sometimes expect settlement to work like a bank transfer.
“You’ve been approved. Why isn’t the money in my account?”
Because approval may only be one stage.
There can still be:
documents,
asset verification,
seller verification,
insurance requirements,
existing finance payouts,
and settlement conditions
to complete.
Let’s Follow the Tara Tractor Transaction
The buyer contacts Thrive Broking before paying the full purchase price.
The initial information is:
Agricultural contractor.
Eight years trading.
Tractor required for business use.
Private seller.
Agreed purchase price:
$145,000.
Six-year-old machine.
Approximately:
4,200 hours.
No trade-in.
Buyer wants to finance most of the purchase.
Now we need to understand both:
the borrower
and
the asset.
The Business Still Needs to Qualify
A private-sale transaction doesn’t remove normal lending assessment.
Depending on the lender and transaction, assessment may consider matters such as:
trading history,
turnover,
financial position,
existing commitments,
bank conduct,
repayment capacity,
and purpose.
Documentation requirements vary.
The Tractor Still Needs to Qualify
Separately, the equipment itself may need to meet lender requirements.
Relevant considerations may include:
age,
type,
condition,
value,
seller,
identification,
and useful life.
Again, requirements vary between lenders.
This Is Why Private-Sale Finance Has Two Sides
Can the business borrow?
And:
Can this particular transaction be funded?
Those aren’t exactly the same question.
Imagine the Business Is Strong but the Transaction Isn’t
The Tara contractor has:
good turnover,
established trading history,
manageable existing debt,
and strong cashflow.
But the tractor has:
unclear ownership,
missing identification,
and a purchase price well above apparent market value.
The borrower may be strong.
The transaction still has problems.
Now Reverse It
The tractor is:
clearly identified,
reasonably priced,
owned by the seller,
and in appropriate condition.
But the buyer’s business has:
very limited trading history,
significant existing commitments,
and weak cashflow.
Excellent equipment doesn’t automatically make the borrower suitable.
Both sides matter.
What About Buying From Facebook Marketplace?
The advertising platform isn’t the central issue.
Equipment can be advertised through:
online marketplaces,
industry websites,
classifieds,
social media,
word of mouth,
or directly between businesses.
The important questions remain:
Who owns it?
What exactly is it?
What is the agreed price?
Can the transaction be verified?
Does it meet lender requirements?
And does the business qualify for the proposed finance?
What About Buying From a Farmer Retiring?
That can be a genuine source of good used machinery.
Perhaps the seller is retiring and disposing of:
tractors,
headers,
implements,
and other equipment.
The fact that the seller isn’t a dealer doesn’t automatically make the equipment unsuitable for finance.
But the transaction still needs appropriate documentation and verification.
What About Buying From Another Contractor?
Same principle.
Businesses regularly sell equipment directly to other businesses.
Perhaps the seller is:
downsizing,
upgrading,
changing equipment brands,
or no longer needs a particular machine.
The commercial reason for the sale can be perfectly ordinary.
What About Equipment Interstate?
The Tara contractor finds another tractor in:
New South Wales.
Now additional practical questions arise.
Who is inspecting it?
How will it get to Queensland?
What will transport cost?
Is the buyer comfortable purchasing it without seeing it personally?
When is payment expected?
Don’t Forget Freight
Suppose:
Purchase price:
$145,000.
Transport to Tara:
$7,500.
Inspection:
$1,200.
Initial servicing after arrival:
$4,500.
The machine may effectively require more cash than the advertised:
$145,000.
Not every associated expense will necessarily be financed with the equipment.
Understand the total acquisition cost.
Consider an Independent Inspection
A finance approval isn’t a mechanical inspection.
A lender agreeing to finance equipment doesn’t mean:
the machine is mechanically sound.
The buyer remains responsible for deciding whether the equipment is suitable.
For significant used machinery purchases, appropriate mechanical or specialist inspection may be worth considering.
Finance and Due Diligence Are Different Things
A broker’s role is not to tell you:
the engine is good,
the hydraulic system is good,
or the machine will last another 8,000 hours.
Those are equipment questions.
Use appropriately qualified people where required.
What If the Seller Wants Cash Before Releasing the Tractor?
That’s normal enough as a commercial expectation.
The seller wants to know they will be paid.
The buyer wants to know the asset can be transferred appropriately.
The lender wants its settlement requirements satisfied.
The process needs to bring those interests together.
Don’t Try to Bypass the Settlement Process
If the lender requires:
specific documents,
verification,
payout information,
insurance,
or other conditions,
those requirements need to be completed.
Trying to speed things up by independently transferring money can complicate the transaction.
What if You’ve Already Paid a Deposit?
Tell the broker:
how much,
when it was paid,
who received it,
and what documentation you have.
For example:
Purchase price:
$145,000.
Deposit already paid:
$10,000.
Balance:
$135,000.
That needs to be reflected correctly in the transaction.
Don’t Hide the Deposit
The lender needs an accurate picture of:
the purchase price
and
how the transaction is being funded.
What if You Want to Borrow More Than the Purchase Price?
Suppose the tractor costs:
$145,000.
The owner says:
“Can we make the finance $175,000 and put the extra $30,000 into the business?”
Don’t assume an equipment-finance facility can simply be increased to create unrestricted working capital.
The asset purchase and working-capital requirement may need to be considered separately.
Tell us what the additional money is actually for.
What if the Tractor Needs Attachments?
Different situation.
Tractor:
$145,000.
Attachments from another supplier:
$28,000.
Now we need to understand whether the proposed transaction involves:
one asset,
multiple assets,
or equipment and accessories being acquired from different sellers.
Raise that at the beginning.
What if the Seller Is GST Registered?
Tax treatment and invoicing need to be correct for the actual transaction.
Don’t guess at:
GST,
tax deductions,
or accounting treatment.
Your accountant or tax adviser should provide tax advice relevant to the business and transaction.
What About Insurance?
Where financed equipment needs to be insured as a condition of settlement, don’t leave this until the last minute.
The lender may require appropriate evidence before funds are released.
Exact requirements depend on the lender and transaction.
Private Sales Can Be Very Good Purchases
There is nothing inherently wrong with buying business equipment privately.
In some cases, a business may find:
better value,
the exact machine it wants,
known local equipment,
good service history,
or machinery that simply isn’t available through a dealer.
The key is not treating a private transaction as though the only difference is:
who receives the money.
The Finance Process May Need More Work Around the Transaction
A dealer may already have:
formal sales documentation,
established banking details,
and processes for financed transactions.
A private seller may be doing this:
once.
That’s why the broker needs to know:
private sale
from the beginning.
The Seller Can Help Make the Process Easier
If you’re buying privately, ask the seller to have available:
their correct legal or business details,
evidence supporting ownership where required,
full equipment details,
agreed sale price,
and information about any existing finance.
The exact requirements will depend on the transaction.
What Should the Buyer Have Ready?
For the equipment:
make,
model,
year,
hours where relevant,
serial or identifying numbers,
purchase price,
seller details,
photos or inspection information where appropriate,
and sale documentation.
For the business:
ABN,
trading history,
turnover,
purpose of the equipment,
existing finance information where required,
and requested finance amount.
Additional financial information may be required depending on the application.
Don’t Wait Until the Seller Is Asking Where the Money Is
If you know you need finance:
start early.
Especially if:
the equipment is interstate,
the seller has finance owing,
the machine is older,
the transaction is related-party,
or settlement is urgent.
Private Sale Versus Dealer Sale
The equipment itself may be virtually identical.
But the transaction isn’t.
With a dealer purchase, the seller is an established equipment business.
With a private purchase, additional verification may be required around:
seller,
ownership,
asset,
and settlement.
That’s why telling the broker:
“It’s a private sale”
at the first conversation is useful.
Back to the Tara Tractor
The owner isn’t buying the tractor because it happens to be cheap.
He has inspected it.
The equipment suits the contracting work.
The hours are acceptable to him.
The purchase price has been negotiated.
The seller can provide the necessary information.
And the business wants to investigate financing the acquisition rather than paying the full:
$145,000
from cash.
Now the finance conversation has enough substance to begin.
Buying Equipment Privately?
If you’ve found a tractor, excavator, loader, skid steer, trailer, agricultural machine or other business equipment through a private seller, talk to Thrive Broking before assuming the finance process will be identical to buying from a dealer.
Tell us:
what you’re buying,
purchase price,
year,
hours where relevant,
who is selling it,
whether the seller is a business or individual,
whether you’ve already paid a deposit,
and when the seller expects settlement.
If you know there is existing finance owing on the equipment, tell us that as well.
We can investigate potential equipment-finance options and what may be required for the particular transaction.
Because with a private equipment purchase, getting comfortable with the business is only half the job.
The other half is making sure the:
$145,000 tractor you’re financing is the $145,000 tractor you’re actually buying, from the person or business entitled to sell it.