Buying a vehicle, machine or piece of equipment from a private seller rather than a dealer? Banks often say no. Mackenzie Commercial Finance regularly arranges finance for private sale purchases across Scotland. Here is how it works.
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My name is Alana Mackenzie and I am a Director of Mackenzie Commercial Finance Ltd. Between Martin and me, we bring over 35 years of combined experience across banking, finance and the legal sector. We are based in Inverness and we arrange Asset Finance for businesses across the whole of Scotland. This article is about one of the questions we get asked most often: can you finance an asset that is being purchased privately, not from a dealer?
The short answer is yes. The longer answer is below.
What is a private sale?
A private sale, in the context of asset finance, is where a business is purchasing a vehicle, machine or piece of equipment directly from another business or individual who is not a dealer. It is a privately negotiated transaction rather than a purchase through a recognised supply chain.
For the purposes of asset finance, a dealer is normally a business whose main activity is the purchase and sale of the type of asset they are supplying. A motor dealer buys and sells vehicles. A plant dealer buys and sells excavators, telehandlers and similar equipment. These are known and understood supply sources with established reputations in the lending market. Lenders are generally comfortable with them.
A private seller is different. It might be a business that has owned an excavator for ten years and is now selling it because they are upgrading. It might be a haulier selling a trailer that no longer fits the operation. It might be an asset listed on Facebook Marketplace, Gumtree, Autotrader or a similar platform. The seller is not in the business of selling assets. They are selling this one, for their own reasons, and the buyer has found it and wants to purchase it.
Why do banks run a mile from private sales?
Mention to most high street lenders that you want to finance an asset you found on Facebook and the conversation will end fairly quickly. This is not unique to any single bank. It is a widespread position across traditional lenders, and there are genuine reasons for it.
When an asset comes from a dealer, the lender has a level of comfort. The dealer has a reputation, a track record, and an ongoing relationship with the lending market. The proof of title is generally straightforward: the finance company holds an invoice from the dealer, and the chain of ownership is clear. If questions arise later about the ownership of the asset, the lender is in a strong position.
A private sale carries more uncertainty. Is the seller selling because the asset has a problem they would rather make someone else's concern? Can they prove ownership? Is there existing finance on the asset that has not been disclosed? These are legitimate questions, and a lender with no appetite for private sales simply declines to engage with them rather than doing the work to find out.
None of this means the private sale is a bad purchase. It often represents excellent value. But it does mean that the standard high street route is frequently not available for this type of transaction.
What proof does the seller need to provide?
The most important requirement for a private sale finance arrangement is proof of ownership. The seller needs to be able to demonstrate that the asset belongs to them and is free from existing finance.
In most cases this means providing a copy of the original purchase invoice from when they bought the asset, along with proof of payment. This is where private sales can sometimes become complicated. Sellers occasionally resist providing the original invoice because it shows what they paid for the asset, and they would prefer the buyer not to know that figure. This is understandable from the seller's perspective, but it is a requirement of the finance process and without it the transaction cannot proceed.
The honest conversation at this point is this: if a seller cannot demonstrate that an asset belongs to them, would you hand over money for it regardless? The lender takes exactly the same view.
Where original invoices are genuinely unavailable, some lenders will accept alternative forms of evidence. A letter from the seller's accountant confirming the asset is on their balance sheet and free of finance has worked in cases we have dealt with. This requires a lender willing to consider it, which is where working with a wide panel of lenders makes a real difference.
What about the asset inspection?
For a private sale, most lenders require a physical inspection of the asset before funds are released. The approach varies by lender. Some require the broker to attend in person and provide photographs. Others allow the buyer to provide photos and a condition report. Some conduct their own inspection via video call with the seller. A smaller number send out their own inspector.
From the buyer's perspective, this should be straightforward. You have presumably already seen the asset you want to purchase, and you have satisfied yourself that it is in acceptable condition. The lender's inspection is confirming the same thing for their own purposes.
From the broker's perspective, a private sale does involve more work than a standard dealer purchase. If the asset is at the other end of the country and the lender requires an in-person inspection, that involves travel time and cost. At Mackenzie Commercial Finance we are upfront about this from the start. In most cases it is not an issue. In cases where it would involve significant travel, we discuss the most practical solution with the buyer before committing to anything.
Will it cost more than buying from a dealer?
The cost of the asset itself is often lower in a private sale, which is frequently the reason buyers are looking at this route in the first place. The seller does not have the overheads of a dealership and can often offer a keener price as a result.
The cost of borrowing may be slightly higher. Lenders who are willing to accept private sales are typically not the lowest-rate lenders in the market. Those lenders, at the very bottom of the pricing scale, tend to stick to dealer supply sources only. The lenders who are comfortable with private sales are generally in the tier-two bracket, and their pricing reflects the additional due diligence involved.
Whether the trade-off is worthwhile is a decision only the buyer can make. If the asset is priced significantly below the equivalent dealer-supplied version, the slightly higher finance rate may still make the overall purchase cost very competitive. If the saving on the asset is small, the calculation looks different. We are happy to work through the numbers with any buyer considering a private purchase.
What does the buyer actually experience?
From the buyer's side, the process of a private sale finance arrangement should feel very similar to a standard dealer purchase. The lender still requires the same financial information from the broker about the applicant. The same ID, the same business financials, the same rationale for the purchase. Hire purchase terms are available. Low deposits are available, including VAT-only deposits in some cases. Balloon payments are available. The financial structure of the agreement is comparable to what you would expect from a standard hire purchase.
The additional steps, the proof of title from the seller and the asset inspection, take place in the background between the broker, the lender and the seller. The buyer's main involvement is facilitating access to the seller and signing an acceptance certificate before funds are released. That certificate confirms that you have inspected the asset and are satisfied with its condition. It is a reasonable thing to be asked to sign, and it is worth taking seriously before you do.
Where does Mackenzie Commercial Finance fit in?
Mackenzie Commercial Finance arranges private sale finance for businesses across Scotland. We have done it for buyers in Inverness, Aberdeen, Dundee, Glasgow, Edinburgh and many other parts of the country. We have a lending panel of over 120 lenders, and within that panel there are lenders who are genuinely comfortable with private sales and who process them as a standard transaction.
We will be honest with you from the start about whether a particular private purchase is likely to be financeable, what the process involves, and what it is likely to cost. If the seller cannot provide proof of ownership, we will tell you before you have committed to anything. If the asset location creates an inspection challenge, we will work out the most practical solution before the buyer is committed to a timeline.
We cover the whole of Scotland. We travel to meet clients, whether at their business premises, at home, or anywhere else that suits. We do not charge consultation fees. Our number is 01463 652 653 and we are available at any time. If you have found an asset you want to purchase privately and you want to know whether finance is possible, a conversation with us costs nothing.
Mackenzie Commercial Finance provides Asset Finance including Hire Purchase and Leasing, Asset Refinance, and Business Loans to businesses across Scotland. We are based in Inverness and we are Appointed Representatives of Crystal Business Finance Limited, giving us access to over 120 lenders across the UK commercial finance market.
The views expressed in this article are the personal opinions of Alana Mackenzie as an individual and do not represent the views of Mackenzie Commercial Finance Ltd or Crystal Business Finance Ltd. Nothing in this article should be taken as financial or legal advice or a recommendation of any kind. Where this article refers to commercial finance, it refers to unregulated commercial lending which falls outside the scope of FCA consumer credit regulation. Regulated finance for sole traders and partnerships is handled separately and in full compliance with FCA requirements. Mackenzie Commercial Finance Ltd is an Appointed Representative of Crystal Business Finance Ltd, which is authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We will receive a commission from the lender for all completed agreements.
