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Learn how used equipment dealers can offer customer financing in the U.S. and Canada while managing asset, lien and credit risk.
Selling used equipment creates a financing problem that new-equipment dealers do not face to the same degree.
Your customer may be financially strong, but the machine is five years old. Another unit may have high hours but an excellent maintenance history. A third may be a trade-in with an existing lien that must be paid before ownership can transfer.
A customer financing program for used equipment dealers needs to evaluate both sides of the transaction: the buyer's ability to repay and the equipment's value as collateral.
Quick Answer: Used equipment dealers can offer customer financing through third-party lenders, lessors and financing intermediaries without carrying the customer loan themselves. A strong program screens the buyer and the asset, verifies ownership and liens, matches the repayment term to remaining useful life, and gives the dealer a clear process from application through payout.
The dealer sells the equipment.
A third-party financing provider handles the financing transaction.
The customer completes an application, the financing provider evaluates the business and equipment, and the dealer provides an invoice containing the information needed to verify the asset.
If the transaction is approved and all funding conditions are satisfied, the financing provider pays the dealer according to the closing instructions.
The customer then repays the financing provider rather than making installment payments directly to the dealership.
That distinction matters.
A dealer that finances customers from its own balance sheet takes credit risk, collection risk and capital risk. A dealer using third-party financing can focus on selling and servicing equipment while an independent financing provider makes the underwriting decision.
For the narrower question of whether older assets can be financed at all, see Mehmi's Can You Offer Financing on Used Equipment? guide.
Used equipment has more variables.
A lender evaluating a brand-new excavator from an established manufacturer generally knows what is being delivered and what a comparable new unit costs.
A used excavator could have 2,500 hours or 12,500 hours.
It could have complete service records or none.
It could have undergone a major engine rebuild.
Its market value could be close to the asking price—or substantially below it.
A used-equipment finance program therefore needs to collect enough information to answer several questions:
There is no responsible universal maximum age or hour limit across all financing providers.
A 12-year-old excavator with a strong resale market is not the same collateral as a 12-year-old technology platform nearing obsolescence.
Canadian dealers can read more about this distinction in Used Equipment Financing Canada: Age & Hours Limits.
A financing program is particularly useful for dealers selling commercial assets with identifiable serial numbers, predictable business uses and established secondary markets.
That can include construction machinery, forklifts, trucks and trailers, agricultural equipment, CNC machinery, fabrication equipment, warehouse equipment, generators, commercial kitchen equipment and other durable assets.
The program becomes even more valuable when average selling prices are high enough that customers routinely ask for monthly payments rather than paying cash.
Canada provides useful context. Statistics Canada reported that 49.3% of Canadian SMEs requested some form of external financing in 2023, including debt and lease financing. Manufacturing, construction and wholesale trade had particularly high rates of financing requests.
In the United States, the Federal Reserve Banks' 2026 Small Business Credit Survey found that 42% of financing applicants received all the financing they sought, while other applicants received only part or none of what they requested. The survey covers U.S. employer firms with 1–499 employees and is a convenience sample rather than a random probability sample.
For dealers, the practical point is that business customers frequently use external financing, but approval is not automatic.
Build the asset checklist into the sales process.
At minimum, the salesperson should know the equipment price, year, manufacturer, model and serial number or VIN where applicable.
For operating equipment, record current hours or mileage.
Photographs become especially useful on older equipment. A financing provider may want images of the complete machine, data plate, hour meter, tires or undercarriage, cab and other significant components.
Maintenance and rebuild records can help explain why an older asset remains commercially useful.
The invoice should also distinguish the equipment itself from significant attachments, delivery, installation, warranties and other costs.
Do not change the asset or invoice after approval without notifying the financing provider.
A lender approving a 2021 excavator at a particular purchase price has not necessarily approved a different machine simply because both units cost the same amount.
For a deeper Canadian buyer-side explanation, see Used Equipment Financing Canada.
They generally consider remaining economic life, not age alone.
Suppose two machines are both eight years old.
One is a mainstream excavator with replacement parts readily available, documented maintenance and an active resale market.
The other is highly specialized production equipment made by a manufacturer that no longer supports the model.
The first asset may present much stronger collateral despite being the same age.
The financing term matters too.
A lender may be comfortable financing an older machine over 36 months but unwilling to extend the obligation over 72 months.
Shortening the term reduces end-of-term asset risk but increases the customer's periodic payment.
That means the customer still needs sufficient cash flow.
Mehmi's Equipment Financing: What Lenders Check in Canada explains how lenders combine business-credit risk with equipment and collateral risk.
Used equipment does not need to be sold under one universal financing structure.
A conventional equipment loan can suit a business that intends to own the asset and repay principal plus interest over an agreed schedule.
The equipment will generally serve as collateral, potentially together with additional security depending on the transaction.
U.S. commercial equipment transactions may also use Equipment Finance Agreements, or EFAs.
An EFA can resemble conventional equipment financing economically while its documentation and legal structure differ from a lease.
Dealers should not describe an EFA, loan and lease as if they were identical.
A lease may suit customers looking for a different payment or ownership structure.
The customer should understand the end-of-term requirement.
A lease might contain a fixed purchase option, fair-market-value purchase option, residual or return obligation depending on the agreement.
A lower monthly payment is not automatically the lowest-cost financing.
Occasionally the customer's real issue is not financing the asset.
A company may have adequate equipment equity but a temporary receivables problem or another working-capital constraint.
Do not force every situation into an equipment loan simply because the dealership sells equipment.
The product should fit the actual financing need.
The asset can be excellent while the buyer is weak.
The reverse can also be true.
Commercial financing providers may consider operating history, cash flow, credit history, existing debt, liquidity, ownership, industry, guarantees and the relationship between the equipment payment and the company's ability to generate cash.
There is no universal credit score or revenue threshold that guarantees approval.
A newer business may receive more scrutiny because there is less historical information available.
An established company can still be declined if existing debt leaves insufficient room for another payment.
Down payment can help reduce the amount financed and provide additional customer equity, but there is no universal required percentage.
The business should not drain all of its operating cash merely to satisfy a down-payment request.
Keep it simple enough that salespeople actually use it.
Introduce financing while the customer is discussing the equipment—not after the buyer has already decided the purchase is unaffordable.
For example:
"Are you paying cash, using your existing bank or would you like us to include a financing option?"
That keeps financing neutral.
If the customer wants an option, send them through the approved application process rather than collecting sensitive financial records over ordinary email.
The dealer provides the equipment quote.
The financing provider reviews the buyer and asset.
Any approval should clearly state its conditions.
Those conditions can include final invoice, insurance, down payment, inspection, lien clearance, proof of ownership, signatures and other documentation.
Only release the asset according to the agreed funding procedure.
U.S. dealers building the broader process can review How to Offer Customer Financing in the United States.
Canadian dealers can use Equipment Dealer Customer Financing in Canada and Dealer Finance Program Canada: Third-Party Setup for their country-specific workflows.
Because possession is not the same as clear ownership.
A machine sitting on your lot could still be subject to a previous lender's security interest.
That issue becomes especially important with trade-ins, auctions, consignment equipment and assets purchased from another operating company.
UCC Article 9 provides the secured-transactions framework for personal property in the United States. The Uniform Law Commission notes that Article 9 governs transactions involving credit secured by personal property and that states maintain filing systems used to disclose security interests.
Equipment dealers therefore need a process for identifying existing liens and coordinating payoff or release requirements before funding.
Titled trucks, trailers and other vehicles can involve separate certificate-of-title rules depending on the asset and state.
Mehmi's Used Packaging Line: UCC and Lien Checks Before Funding shows why a used asset should not be assumed clear merely because the seller possesses it.
Canadian rules must be handled province by province.
Ontario's Personal Property Security Registration system allows security interests in personal property to be registered and searched. Ontario specifically explains that creditors taking security interests in personal property can register financing statements under the PPSA.
Quebec uses the RDPRM framework rather than Ontario-style PPSA terminology. The Government of Quebec advises purchasers of used vehicles to check the RDPRM to determine whether the asset has been used to secure financing or is affected by certain outstanding rights.
Do not copy a U.S. UCC process into a Canadian transaction or assume one province's procedure applies throughout Canada.
Treat ownership verification as part of credit packaging.
The financing provider may request a bill of sale, seller identification, original acquisition documents, lien searches and payout information.
A private seller also needs to demonstrate the legal authority to sell the equipment.
Canadian dealers dealing with these transactions can review How to Finance Used Equipment From a Private Sale in Canada.
Confirm who actually owns the unit and whether the dealer has authority to sell it.
The customer's payment should not be released based solely on the fact that the equipment is displayed at the dealership.
Determine whether money is still owed against the trade.
If there is an existing secured lender, the transaction may require a payout statement and release procedure before the dealer obtains clean title to the equipment.
Auction transactions can be particularly time-sensitive because payment deadlines may arrive before a normal finance application is complete.
Canadian dealers and buyers can review Used Truck & Equipment Auction Financing in Canada before bidding or accepting a customer order involving auction equipment.
It depends on the inventory.
A dealership selling one narrow category of relatively late-model equipment may be well served by a strong specialized financing provider.
A dealership selling a wider mix—such as three-year-old excavators, 10-year-old loaders, commercial trucks, attachments and specialized machinery—can run into one lender's asset limits quickly.
Different providers can have different preferences around asset age, customer credit, startups, transaction size and industry.
The objective should not be to send every application everywhere.
The goal is controlled lender matching.
Start with the customer's profile and the equipment. Determine which financing provider is actually appropriate, then submit a complete file.
That is considerably more efficient than discovering after several days that the lender never finances that type or age of asset.
Consider a Canadian contractor buying a used excavator from a dealer.
Assume:
Using a standard amortizing calculation, the estimated payment is approximately CAD $2,038.63 per month.
Total scheduled payments over 48 months would be approximately CAD $97,854.00.
That includes approximately CAD $17,854.00 of interest.
Including the CAD $20,000 down payment, total cash paid toward the purchase and scheduled financing would be approximately CAD $117,854.00, before excluded taxes and expenses.
This is an illustrative mathematical example only. It is not a Mehmi Financial Group rate, offer, approval or customer result.
The important underwriting question is whether the contractor can support another CAD $2,038.63 every month, including during slower periods, while still paying employees, suppliers, taxes, existing debt and maintenance expenses.
Canadian buyers can test alternative equipment prices, down payments and terms with Mehmi's Equipment Financing Calculator. The calculator is denominated in CAD, and its results are estimates rather than financing offers.
U.S. dealers should not reuse the Canadian calculation as a U.S. quote. U.S. transactions should be modeled in USD using the applicable lender terms, taxes, fees and state-specific requirements.
When financing is being used to disguise a bad transaction.
An inflated equipment price does not become reasonable because the customer can afford the monthly payment.
A machine with little remaining useful life should not be stretched over an inappropriate financing term solely to reduce the payment.
A customer with continuing operating losses and no credible repayment capacity may need to delay the purchase.
And a dealer should not accept funds for equipment when ownership or lien status remains unclear.
Financing works best when a commercially sensible asset is being purchased by a business capable of supporting the obligation.
Sometimes the better answer is a newer unit, less expensive unit, larger equity contribution, rental arrangement or delayed purchase.
Do not choose a dealer-finance program based only on a headline rate or the number of lenders advertised.
Ask whether the program handles used assets in the categories you actually sell.
Ask what information is required for older machines.
Understand when inspections or third-party valuations may be required.
Confirm how private sales, trade-ins and existing liens are handled.
Ask how lender matching works when the first provider does not fit the asset.
Understand credit-inquiry authorization, documentation responsibility, vendor payout requirements and whether the dealer has any recourse or repurchase obligation.
And confirm geographic availability.
For Canadian dealers wanting the financing experience to remain under their own brand, Mehmi's White Label Equipment Financing for Dealers explains that structure in more detail.
U.S. programs require additional attention to state-by-state availability and commercial-financing rules. Mehmi currently describes its U.S. services as available in selected U.S. markets rather than every jurisdiction, so dealers should verify current coverage before advertising financing in a specific state.
Potentially. There is no universal 10-year cutoff. Financing providers consider equipment category, condition, hours or mileage, market value, serviceability, useful life and expected age at the end of the financing term.
Some financing providers consider startups. The provider may place greater weight on owner experience, personal credit, liquidity, customer contribution and the strength of the equipment because the business has limited operating history.
No. Mainstream assets with clear market values may not require a formal appraisal. Older, specialized, high-value or privately sold equipment is more likely to require additional valuation or inspection support.
Potentially, but auction deadlines can make the transaction harder. Buyers should ideally arrange financing review before bidding because the auction's payment deadline may arrive before a new credit application can be completed.
The dealer is generally paid when the financing transaction funds and all required conditions have been satisfied. A credit approval by itself should not be treated as permission to release the equipment.
No universal percentage applies. Requirements depend on the buyer, equipment, purchase price, lender and transaction. Older assets or higher-risk files may require additional customer equity.
No. The basic credit principles are similar, but lien systems, security documentation, taxes, titles, disclosures and other legal requirements differ. U.S. transactions commonly use UCC terminology, while Canadian requirements vary by province, including PPSA systems in provinces such as Ontario and the RDPRM framework in Quebec.
Mehmi Financial Group operates as a commercial financing brokerage and intermediary, not as the direct lender making every credit decision. Mehmi can help structure and place qualifying transactions with independent financing providers, which control final approval, pricing, conditions and funding.
A good used-equipment finance program does more than add an "Apply for Financing" button to your website.
It gives your sales team a process for identifying the equipment, screening unusual asset issues early, getting customers into the correct application channel, resolving liens and ownership questions, and moving an approved transaction through documentation to dealer payout.
Mehmi Financial Group works with equipment dealers and business customers in Canada and eligible U.S. markets through third-party financing providers.
To discuss a program, be prepared to share:
Call Mehmi Financial Group at 833-863-4644 or contact Mehmi Financial Group to discuss your used-equipment financing workflow.
All financing is subject to credit approval, asset eligibility, documentation, financing-provider requirements and geographic availability.
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