Bought with Cash? How Releasing Cash from an Auction Purchase Works

Sometimes the only way to win a lot is to pay cash on the day. The machine, vehicle or building is yours, but your working capital is now tied up in it.

If you bought at auction in the last six months, you may be able to release some of that cash by refinancing the purchase. This guide explains how it works, what lenders look for, and what to think about first.

What releasing cash means

Releasing cash, sometimes called asset refinance, means using an asset you already own to raise finance. A lender advances money against the asset, and you repay over an agreed term while you keep using it.

It turns a one-off cash payment into manageable monthly repayments, and puts money back into your business.

How it works for different assets

Machinery, vehicles and equipment. A common structure is for the lender to buy the asset from you and immediately supply it back on a hire purchase or lease agreement. You keep using it throughout, and with hire purchase it returns to your full ownership once the agreement ends.

Business property. For premises you trade from, cash is usually released with a loan secured on the property.

In both cases, the asset stays where it is, working for your business.

Why it matters that the purchase is recent

Hammer Ready looks at assets bought at auction within the last six months. A recent purchase comes with fresh evidence that lenders value:

• the auctioneer's invoice showing the price paid
• proof that you paid in full
• an up-to-date description and condition of the asset

That makes it easier for a lender to confirm what the asset is and what it is worth.

What lenders look for

• Clear ownership. The asset must be owned outright and free of other finance.
• The asset's value. The lender values the asset itself. The valuation may be lower than the price you paid, especially if you bought at a strong price on the day.
• Resale market. Assets with a strong second-hand market are easiest to refinance.
• Your business. Trading record, accounts, credit history and affordability all count, just as with any finance.

Lenders usually advance a proportion of their valuation rather than the full amount, so expect to release less than you paid.

What you will need

• The auctioneer's invoice and proof of payment
• Details of the asset: make, model, year, serial number or registration, hours or mileage, and photos
• For property: title details and, if available, the legal pack from the auction
• Your latest accounts and recent business bank statements
• Details of any existing finance agreements

Things to think about first

• Is it worth the cost? Releasing cash means paying interest. Compare that cost with what the freed-up cash will do for your business.
• What is the money for? Working capital, your next auction purchase or a planned expansion are common reasons. A clear purpose strengthens an application.
• Tax and VAT. Refinancing structures can have VAT and tax effects. Ask your accountant before you go ahead.
• Plan ahead next time. If you expect to buy again, pre-approval before the sale can mean you never need to tie up the cash at all.

Put your cash back to work

Hammer Ready can help you release cash from plant and machinery, business assets, vehicles, farm machinery, specialist assets and business property bought at auction in the last six months, subject to the asset, your business and lender approval.

We work with limited companies, partnerships, LLPs, sole traders and PLCs, on amounts from £26,000 for assets and £50,000 for property. There is no broker fee, and all finance is subject to status and lender approval.

Hammer Ready is a trading style of MBA Capital Partners Limited. We are a commercial finance broker, not a lender, and arrange business finance that is not regulated by the FCA. All finance is subject to status. This guide is general information, not tax or legal advice.