Buying your first truck at auction?

Auctions can be attractive to first-time truck buyers because they offer access to a wide range of used commercial vehicles in one place. But the buying process can be less forgiving than a normal dealer transaction.

Once the auction closes, there may be limited time to organise finance, documentation and settlement.

If you're planning to purchase your first truck at auction, it can help to speak with TAFS before bidding. We can review your business, industry experience and expected purchase amount so you have a clearer understanding of your likely finance position.

For newer businesses, lenders may place more emphasis on previous industry experience, credit history, expected work, truck type, purchase amount, any deposit and the overall strength of the application. The final truck will still need to meet lender criteria.

Bidding on several trucks?

Auctions can also be useful for businesses looking to purchase several trucks. A fleet operator may find multiple suitable vehicles through a fleet disposal or commercial auction.

Where you're planning to bid on several trucks, it helps to establish the overall finance requirement before the auction.

We can review current fleet size, existing vehicle finance, the number of trucks being targeted, the expected total purchase amount, whether the trucks are replacements or additions, business cash flow, and the deposit or equity available.

If you don't win every vehicle you intended to buy, the final transaction can then be adjusted around the trucks actually secured.

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Don't assume every auction truck will qualify

One of the most important things to understand about auction finance is that an approval for the borrower is not necessarily approval for the final asset.

A lender may be comfortable with your business but decline the particular truck because of its age, condition, asset type, purchase price, kilometres, insufficient vehicle information, or its expected age at the end of the loan.

Before bidding on an unusual, very old or high-value truck, send the details to TAFS where possible. We can check whether there are any obvious lender-policy issues before you commit.

Conditional approval before the auction

Depending on the lender and your circumstances, it may be possible to obtain an indication or conditional approval before you've selected the final truck.

This can help establish an approximate borrowing range, likely lender options, expected documentation requirements, whether a deposit may be required, and the types and ages of trucks lenders may consider. That can give you more confidence when setting your bidding limit.

However, conditional approval is not the same as unconditional approval. Once you've won the auction, the lender will still need to review the actual truck, final purchase price and auction documentation.

If the truck falls outside the lender's asset criteria, the original approval may not apply.

Auction payment deadlines matter

Auction houses generally require payment within a set timeframe. That can make the timing of finance particularly important.

Starting the finance application after winning the auction can create pressure if financial information still needs to be collected, the lender hasn't assessed the business, the truck requires additional approval, documents are missing, or the asset falls outside the first lender's policy.

Preparing before the auction can reduce some of that uncertainty.

TAFS can work through the applicant side of the finance first so that, once you win a suitable truck, the focus can move to final asset approval and settlement.