Buying Used Machinery at Auction, a Clearing Sale or Privately

A used excavator, tractor or trailer can save you a lot of money over new. But when you buy from an auction, a clearing sale or a private seller instead of a dealer, the finance works a little differently. Two things catch people out: timing, because sale days move fast, and checks, because nobody else is making sure the machine is clean.

Here is how to line up the finance before sale day, what to check before you hand over any money, and how lenders look at second-hand gear.

Where you buy it changes what the lender needs

Lenders fund used machinery every day. What changes from one purchase to the next is the paperwork and how much of the checking falls on you.

• Dealer. The easiest path. The dealer issues a tax invoice, knows the process and often has the service history on file.
• Auction house. Online or on site. Machines are usually sold as is, where is, which means no warranty and no refunds if something turns out to be wrong. Payment terms are tight.
• Clearing sale. An on-farm auction, usually run by a rural agent when a farmer sells up or downsizes. A lot of gear goes under the hammer in one day, and you pay the agent.
• Private seller. A direct deal with the owner. Often the best price, but you and the lender do all the checking.

Whichever way you buy, the lender will want three things before it pays anyone: an invoice from the seller, the exact details of the machine (make, model, year, serial or chassis number and hours), and confidence that nobody else has a claim over it.

Get approved before sale day

This is the single most useful thing you can do. At an auction or clearing sale, a winning bid is a commitment to buy. You cannot make it subject to finance, and the sale terms often want full payment within a few days. If you start the application after the hammer falls, you are racing the clock.

Pre-approval means the lender assesses you and the business first and sets a limit. The specific machine is confirmed once you have won it. The approval is still conditional on the machine being acceptable to the lender, so tell them upfront what you are likely to bid on: the type of machine, roughly how old, and your price range. That way the approval covers what you actually buy.

Work out your real ceiling

The hammer price is not the whole bill. Before you set your limit, add up:

• the buyer's premium the auction house charges on top of the hammer price
• GST, if it applies to that lot and to the premium
• transport to get the machine home or to site
• any repairs, tyres or servicing it will need before it goes to work

A simple example: a machine knocked down for $80,000 at a sale that adds GST costs $88,000 before the premium, transport and any repairs. Set your limit from the total, not the hammer price.

Ask the lender whether the loan can cover the premium and the GST, or whether you will pay those yourself.

What if I win something the lender won't fund?

Then you still owe the auction house. That is why the pre-approval conversation should cover the type and age of machine you are chasing, and why it pays to check with your broker before bidding on something outside that range.

Check the machine before you pay

A used machine can come with problems you cannot see from the bidding line. Some are mechanical. Some are legal.

Run a PPSR search

The Personal Property Securities Register shows whether someone else, usually a lender, has a registered interest in the machine. A search costs $2. If money is still owing and you buy it anyway, the machine could be repossessed from you later.

• Search by serial number (the VIN or chassis number) if the machine counts as a motor vehicle under the register's rules. Some excavators, harvesters and backhoes do. Some smaller machines, like a bobcat, may not.
• If it cannot be searched by serial number, search against the seller: their ACN for a company, or their name and date of birth as shown on their driver's licence for a person.
• If a registration shows up, do not pay until the seller has paid out that debt and the registration has been removed. When you finance through a lender, it will usually arrange the payout from the purchase money.

Your lender will run its own checks as well, but do yours before you commit.

Make sure the seller owns it

The name on the invoice should match the owner. The serial plates should match the paperwork and show no signs of being tampered with. If anything does not line up, walk away.

Look at hours and history, not just the year

On machinery, hours on the meter usually tell you more than the build year. A service logbook or workshop records make a big difference, both to the machine's value and to how easily a lender will fund it. Ex-hire machines with known hours and regular servicing are popular for a reason.

Get someone who knows the machine to look at it

Use the inspection days before an auction, or bring a mechanic to a private sale. On an excavator or loader, that means the engine, hydraulics and cylinders (look for leaks), pins and bushes, the undercarriage or tyres, and any attachments that come with it. On bigger purchases, an oil sample can pick up engine or hydraulic wear before it becomes your problem.

Check registration if it goes on the road

Trailers, and some tractors and machines that travel on public roads, need registration. The rules differ by state, so check what the machine needs and how the registration transfers before you buy.

GST and tax on used machinery

Whether GST is in the price depends on who is selling.

• A dealer or other GST-registered seller includes GST in the price. A GST-registered business can generally claim it back on its BAS.
• A private seller who is not registered for GST does not charge it, so there is no GST to claim.
• At auction, it depends on the seller of each lot. The catalogue shows whether a lot is sold GST inclusive or has GST added, and the buyer's premium usually carries GST too. Check your invoice.

The finance structure affects the tax side as well. Under a chattel mortgage you own the machine from day one, and a GST-registered business can generally claim the GST on the purchase price. Hire purchase, leases and rentals are treated differently. Our guide to chattel mortgage, hire purchase, lease or rental explains each one.

Does the instant asset write-off apply to used machinery?

It can. Small businesses with an aggregated turnover under $10 million can deduct the full cost of an eligible asset costing less than $20,000 in the year it is first used or installed, and from 1 July 2026 that limit is permanent. It covers second-hand assets as well as new ones. Most machinery costs more than that, so it tends to matter for smaller items like an attachment or a trailer. The ATO's instant asset write-off page has the details. Confirm how it applies to you with your accountant before you buy.

How lenders look at second-hand gear

A used machine is assessed on the business behind it and on the machine itself as security.

• Age at the end of the loan. Many lenders cap how old a machine can be when the loan finishes. An older machine usually means a shorter term or a bigger deposit.
• Hours and condition. Lenders weigh hours against age, brand, condition and service history. There is no single cut-off.
• How easy it is to resell. Common machines like excavators, loaders, tractors and trailers are easier to fund. Specialised gear may need a lender that knows it well.
• Private sales. Some lenders ask for an inspection report or a valuation. The lender usually pays the seller directly and pays out any finance still owing on the machine.
• The business. ABN and GST registration, time trading, BAS and bank statements. If your financials are behind, many lenders will work from your BAS and bank statements instead.
• Deposit and balloon. A trade-in or deposit helps on older gear. A balloon lowers the repayment but leaves a lump sum at the end. Our balloon payments guide covers when that makes sense.

Quick notes by machine

• Excavators, loaders and other earthmoving gear. Hours, undercarriage and hydraulics come first. See excavator finance and yellow goods finance.
• Tractors and farm machinery. Clearing sales are a common source. Repayments can often be set up to match when your income comes in. See tractor finance and agricultural finance.
• Trailers. Check the registration, the compliance plate and the tyres. See trailer finance.
• Concrete pumps. Specialised and expensive, so service records and a proper inspection matter even more. See concrete pump finance.

A simple sale-day checklist

• Pre-approval in place, covering the type and age of machine you are after
• Your ceiling worked out, including the buyer's premium, GST, transport and repairs
• The sale terms read: payment deadline, pick-up deadline and whether it is sold as is
• The machine inspected, by you or someone who knows it
• A PPSR search done, and nothing owing (or a plan to pay it out at settlement)
• Serial or chassis number, hours and photos sent to your broker
• Transport and insurance sorted before the machine is moved

Quick answers

Can I get finance for a machine bought at auction?

Yes. Get pre-approved before the sale, pay the deposit on the day, and send the invoice to your broker straight away so the balance can be paid inside the auction's terms.

What if I have to pay on the day at a clearing sale?

Talk to the agent before the sale, because some will agree in writing to wait for the lender's payment. If you do pay on the day, some lenders can finance the machine afterwards, as long as you come to them soon after the sale with the invoice.

Can I finance a private sale?

Yes, with lenders that fund private sales. Expect a PPSR check, proof the seller owns the machine, and sometimes an inspection or valuation. The lender pays the seller directly.

How old can a used machine be?

It depends on the lender and the machine. Many cap the machine's age at the end of the loan, so older gear usually means a shorter term, and sometimes a deposit.

Where to start

Compare City works with a panel of 80+ lenders, including lenders who fund used machinery from auctions, clearing sales and private sellers regularly. Most approvals come back within 24 hours, so get your pre-approval sorted before sale day, not after.

You can check the numbers first with our equipment finance calculator, then apply when you are ready. More on equipment finance.