Trading in the old mower: what a part exchange is actually worth

Customer situation

A golf club replacing its greens machinery. The machine chosen was a used Toro GR3420 Hybrid TriFlex — a triple greensmower — at £48,500 before VAT.

The challenge

Two things made this more than a straight purchase. The club had an old machine to dispose of, and like most clubs it wanted the cash impact spread rather than taken in one hit before the season.

A part exchange inside a finance agreement is not the same as selling privately. The trade-in value comes off the amount to be financed, which reduces what is borrowed and therefore what is paid in interest across the term. But it has to be documented and valued as part of the deal, and the VAT on it handled correctly — it is a disposal, not a discount.

• Sell the old machine privately first — possibly a better headline price, but it leaves a gap with no machine, and the proceeds arrive on somebody else’s timetable.
• Buy new — a considerably larger commitment for a machine class whose specification has not moved materially in years.
• CW Asset Finance route — take the trade-in inside the agreement and finance the balance over five years.

What we did

The club contributed £4,850 and traded in its old machine, with the VAT on the part exchange offset against the VAT due. Including the VAT settled at the start, £15,050 was paid on day one and £43,150 was financed over 60 months on fixed-rate hire purchase.

Worth being clear about something a lot of buyers miss. On this structure the VAT is paid upfront, so “no deposit” would have been the wrong description even though the capital was largely funded. Most of that opening payment is VAT, and a VAT-registered club reclaims it on its next return — a timing cost rather than a real one, but still cash leaving the account before the machine has cut a green.

Key outcome

Professional-grade greens machinery on the course for a fraction of new, the old machine gone as part of the same transaction, and a five-year term the club chose rather than one imposed on it.

“A trade-in inside the agreement is usually cleaner than selling privately and then trying to time the purchase around the money arriving. Ask what the trade-in is worth against the finance, not just what somebody might pay you for it.”

— Conor, CW Asset Finance

Every application is assessed on its own merits and all finance is subject to status and lender approval. This is one client’s outcome and is not a guide to what any other business will be offered.