# Pre-Purchase Checklist for Equipment Buyers

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Last modified: 2026-05-29T19:39:17+00:00
Type: efin_guide

## Summary

Pre-Purchase Checklist for Equipment Buyers. Comprehensive guide.

## Content

Before signing a loan or lease for equipment, run through this checklist. It catches surprises that are expensive to fix after closing.

Step 1: Verify the equipment

Real seller: confirm the seller is a real business (state registration, BBB, online reviews). Avoid sellers who pressure you to wire money to personal accounts.
Equipment matches the quote: serial number, make, model, year, condition. Get a written quote that matches what the lender will fund.
Title status: for titled equipment (trucks, trailers, vehicles), confirm clear title or pending DMV transfer. Run a title search if buying private-party.
Liens released: for used equipment, confirm any existing UCC liens are released before purchase. Get a copy of the UCC-3 termination from the previous lender.
Inspection: for used equipment over $25K, pay for a qualified inspector. For trucks, a DOT mechanic. For construction, a service tech. Cost is $250-500 and saves much more than that if it catches a serious problem.


Step 2: Verify the lender

State licensing: verify the lender is licensed in your state. Many states require commercial finance licensing.
BBB and reviews: check for unresolved complaints. A small number of complaints is normal; a pattern of complaints about hidden fees or unauthorized withdrawals is a flag.
Address and identity: the lender should have a verifiable business address (not just a PO box). Search the state's corporate registration.
References: ask for references from other customers in your industry. Talk to them.


Step 3: Review the quote

APR: stated, not a factor rate. Compare across 2-3 lenders.
Total finance charge: total interest plus all fees over the life of the loan.
Total of payments: sum of all monthly payments plus any balloon.
Fee schedule: origination, doc, UCC filing, title, late, NSF, prepayment, end-of-lease return/inspection. Get the complete list.
Down payment: exact amount, due when.
Soft costs: what is included (delivery, install, training) and what is excluded.
Sales tax handling: on the equipment, when and how paid.


Step 4: Review the credit and routing

Soft pull for pre-qualification: confirmed not affecting your credit score.
Hard pull only after explicit consent: for final underwriting.
Single matched lender: avoid services that shop your application to many lenders (each generates a soft pull at minimum and may generate hard pulls).


Step 5: Review the loan or lease documents
Read every page. Look for:

Loan term and rate: match the quote
Payment amount and due date: match the calculator
Prepayment terms: simple-interest payoff preferred; rule-of-78s less favorable; pre-computed worst
Default and acceleration clauses: what triggers default, what the lender can do
Personal guarantee scope: who signs, what assets covered, any limitations
Cross-collateralization: specific equipment or blanket on all assets
Insurance requirements: minimum coverage, lender named as loss payee
End-of-term provisions (leases): return inspection criteria, residual buyout price, automatic-renewal language


Step 6: Insurance arrangement

Get an insurance quote before closing. Property and liability coverage on commercial equipment.
Confirm the lender accepts your insurer (most lenders are flexible).
Have the binder ready for the lender at closing.


Step 7: Closing

Read every signature page
Confirm the actual amounts on the closing statement match the quote
Ask about any new line items you do not recognize
Get copies of everything signed
Confirm UCC filing details (state, debtor name, collateral description)


Step 8: Post-closing

Set up auto-pay from your business account (ACH)
Note the first payment date
File the closing documents in a safe place (you will need them for tax filing and any future refi)
If buying used equipment, confirm any previous UCC is released within 30-60 days of closing
Document the placed-in-service date for Section 179 purposes


See also our red flags guide and post-funding checklist.