Won the skid steer and the auction wants payment within days? Get a written pre-approval before you bid, set your max bid from it, and check the serial number and lien records first. Without that, a contractor is choosing between paying cash out of the operating account and losing the deposit.
General info, not legal or financial advice.
Why does auction timing break a normal equipment financing file?
A dealer deal gives you a quote first and a delivery date later. An auction flips that order. You learn the price when the bidding stops, and the payment clock starts right away.
A normal file moves from quote to application, documents, underwriting, insurance and funding to the seller. We walked through that calendar in https://mcafax.com/notebook/contractor-equipment-funding-timeline . Each auction sets its own payment deadline in its terms. Read those terms before you register, because they decide how much of that calendar you can still use.
Two other things change. The seller is the auction company, not a dealer. The invoice with the serial number only exists after you win. Ask your funder in writing whether it pays auction companies at all, and how many days it needs after it gets the winning invoice.
What should be in hand before you register to bid?
Skid steer and excavator buyers in contractor forums keep landing on the same point. The cheap hammer price only helps if the money is ready when the invoice arrives. Build this folder before bid day:
- A written pre-approval with the maximum amount, term, cash down and expiration date
- The funder's age and hour limits for that machine class
- The lot's serial number, hours, photos and any inspection report the auction offers
- The buyer's premium, document fees, tax and transport, all added to one total
- Your insurance agent's contact, ready to issue a certificate the day you win
- The auction's deposit rules, including what happens to the deposit if you do not pay on time
How do you set a max bid from the approval?
Work backward from the cash you can actually close with. Every fee on top of the hammer price comes out of the same pot.
Worked example
All names and numbers are made up.
Hollis Grading has a pre-approval for up to $55,000 financed and $12,000 of its own cash for the deal. That is $67,000 all in. Transport is $900 and the auction document fee is $300, leaving $65,800. This auction charges a 10% buyer's premium, and tax in this example is 6.25% on hammer plus premium. Each $1 of hammer costs about $1.17 out the door. So $65,800 divided by 1.16875 is about $56,300, and Hollis sets a hard stop at $56,000. A unit that sells for $61,000 is somebody else's machine.
How do you check title and liens before the gavel?
Lenders note their interest in business equipment by filing a public UCC financing statement with the Secretary of State. The Texas Secretary of State explains that filing system here: https://www.sos.state.tx.us/ucc/index.shtml . Use your own state's office for the search.
- Search the seller's legal name in the state UCC records where the seller is organized
- For titled units like dump trucks and trailers, check the title for a listed lienholder
- Match the serial plate in the photos to the listing and to the invoice
- Ask the auction what title or bill of sale it hands over at payout
Your funder will likely run its own search. Ask for its result before any money moves.
What if the approval does not land in time?
Walk away from the lot. Missing one machine costs less than draining payroll cash or forfeiting a deposit. Ask your funder in writing whether it will consider a machine you already paid for, before you assume it will.
Watch for a "seller" who reaches out off the auction platform with a lower price and new wire instructions. The pattern is covered in https://mcafax.com/notebook/scam-report-fake-equipment-dealer . Report payment fraud at https://reportfraud.ftc.gov .
Keep the product straight as well. An equipment loan or lease is tied to the machine. A merchant cash advance is generally a sale of future receivables with a different cost structure. The comparison is at https://mcafax.com/notebook/equipment-financing-vs-merchant-cash-advance .
For the bigger contractor funding picture, start at https://mcafax.com/notebook/construction-business-loans . When you are ready to compare paths, see https://mcafax.com/notebook/where-to-get-business-funding . Buying an older unit off a lot instead? Read https://mcafax.com/notebook/contractor-finance-used-equipment .
