Equipment auctions, whether in person, online or both, are one of the best places to find good prices on excavators, loaders, dump trucks and tow trucks. But auctions work on their schedule, not yours. Payment is usually due within days of the sale, and the equipment is sold as-is. Here's how to buy at auction with financing without getting caught short.
Step 1: Get approved before the auction
The biggest mistake buyers make is bidding first and looking for financing after. Talk to your finance contact a week or two before the auction. Getting pre-approved tells you how much you can spend and what equipment the lender will accept, so you bid with confidence instead of guessing.
Step 2: Know the lender's equipment limits
Lenders usually set guidelines for what they'll finance, such as how old the machine or truck can be, maximum hours or mileage, and the types of equipment they're comfortable with. Ask about these up front so you don't win a lot your lender can't finance.
Step 3: Do your homework on each lot
- Read the auction's listing and inspection report carefully
- Inspect in person or send a mechanic if the auction allows it
- Check the hour meter or odometer, and ask about service records
- For trucks, run the VIN and confirm the title status
- For machines, check the serial number and look for signs of heavy wear or repairs
Save the lot number, listing and inspection report. Your lender will want the details.
Step 4: Understand the auction's terms
Before you bid, read the auction's terms: the buyer's premium, sales tax, documentation fees, payment deadline, accepted payment methods and pickup deadline. The buyer's premium and fees add to your total cost, so include them in your maximum bid. Ask your lender which of these costs can be financed.
Step 5: Set your maximum bid and stick to it
Work backward from your approval amount and the monthly payment you're comfortable with. Our equipment loan calculator can help. Then add the premium and fees, and set a hard limit. Auction fever is real, and overpaying erases the savings you came for.
Step 6: After you win
Send your lender the invoice from the auction right away. The lender will typically finalize the deal, have you sign the documents and pay the auction directly. Line up insurance on the equipment before pickup, and arrange transport in time to meet the auction's pickup deadline.
Common pitfalls
- Missing the payment deadline because financing wasn't ready
- Winning equipment that's too old or has too many hours for your lender
- Forgetting the buyer's premium and fees when setting your budget
- Skipping the inspection on an as-is sale
- Not planning transport, leading to storage fees
Planning to buy at an upcoming auction? Talk to us before you bid and we'll help you line up financing. You can also read new vs. used construction equipment to compare your options.