Learn the Pros and ConsNot sure if you should use new or used heavy equipment for your business? If you have recently found yourself in need of heavy equipment, it is quite possible that you are now faced with the dilemma of whether to buy new or used. On the one hand, it is very tempting to want the brand new piece, with all the newest features and technology. On the other hand, it might make more sense to buy a used piece and save some money that could be better spent on other areas of business. There are a few things you should take into consideration when faced with a decision such as this. While there are pros and cons on both sides of the coin, in the end, the decision you make must make the most sense for the future of your business. When faced with a similar decision about a smaller piece of equipment such as office furniture or materials, making the wrong decision doesn’t particularly leave you with a great deal of regret. Making the wrong decision on something of this caliber, however, can have consequences that are much worse and far-reaching.
Choosing Brand New Heavy EquipmentIt may be that the job you have to do calls for the latest in technological advancements in heavy equipment. Some jobs and jobsites simply cannot be accomplished with outdated equipment and it is in these instances when it makes sense to look at purchasing brand new equipment. The newest equipment is sure to be precise, up to all the newest safety codes and ready for anything the worksite might call for. A brand new piece of heavy equipment is also covered by a warranty, which will be a safeguard for your company. If you do not have the extra capital to put into maintenance and repairs, should they come up, then a warranty is incredibly important to have. Used heavy equipment may also have a limited warranty, but they do not usually cover as a covered in a brand new warranty. When purchasing brand new, you should know what to expect when it comes to price. All the new features are great, but you will surely pay for it. New pieces, depending on the type of equipment, features and name brand will easily cost you between $50,000 and $500,000, with some pieces even costing much more. With price tags this high, it is more likely than not that you will need to finance the equipment in order to keep a majority of your capital in your business. This is not usually a problem unless you happen to have less than perfect credit. The lower your credit score, the harder it will be to obtain good terms for financing. You might then have to have a cosigner, put up personal collateral, deal with higher interest rates or deal with terms that are less than perfect.
Choosing Used Heavy EquipmentIf you do not absolutely have to have brand new equipment, then it might be a wise decision to purchase slightly used or refurbished equipment. This is a good choice if your business gears more towards general construction work, demolition services or anything else that does not demand the latest features in a piece of equipment.
Is it Stolen Equipment?One of the primary concerns when buying used equipment is if the seller is the rightful owner, could the equipment be stolen? It sure can, so be very careful on who you’re buying this used equipment from. You’ll need to have you own checks and balances to make sure you’re buying a legit piece of equipment, or else you could end up with a lawsuit, or even worse… behind bars.
How Safe is the Equipment?Another big concern when purchasing used equipment is safety. Used heavy equipment, when not properly tested and maintained at optimum levels, can wind up not only being unsafe to operate, but can also cost you tons of money in repairs and upkeep. In that respect, you might be thinking it would be best to stay away from used heavy equipment. If you shop around for the best deal, however, and have any machinery you are considering looked at by a good mechanic, there are ways to avoid the aforementioned scenario. For instance, if you are looking at a piece of heavy equipment that sells for roughly $200,000, it might be that you can find it for about half that on the resale market. You can have it checked out and you might find a few minor things that need attention. Many times, you can purchase the piece and have it serviced for general maintenance. You can even completely overhaul some of the parts where the most wear and tear is. And yet you still have not spent the amount you would have paid for brand new. Yet you still have a nearly new piece of heavy equipment, and you know the exact history of it.
Check the Safety of the EquipmentThere are also situations in which you might want to avoid a used piece of heavy equipment. If the equipment you are looking at is quite old, there could be serious problems in finding replacement parts, should you find that you need them. In this situation, it is a good idea to look before you actually make the purchase. It’s also good to make sure the parts are still manufacturing parts and are still available. There is nothing worse than getting a great piece of used equipment only to find that you will not be able to make the needed repairs to it when the time comes.
Before You Make Your ChoiceNo one can tell you whether to buy new or used heavy equipment, because that depends solely on your own personal needs and the needs of your business. There are a few steps you will want to go through, however, to reach that decision.
- Know exactly what you need, not only for the present, but also for the future. If your needs will soon be changing, you will want to take that into consideration as well.
- Consider cost of operation when factoring in what you will spend overall. Getting this information up front, especially when purchasing used equipment, will be of great importance.
- Do plenty of research before you shop and be ready to ask many questions based on that research. No question is out of line when it relates to your business and finances.
- Consider the cost difference between buying a brand new piece of heavy equipment and the cost to purchase used and then refurbish it.
Contact First Capital for Your Used Heavy EquipmentIf you’re ready to get the financing you need for your equipment, let First Capital Business Financing help you. Call us today at 888-565-6692 or apply online to prequalify for your loan. Get the equipment you need to help you business!
Is Buying Used Heavy Equipment Better Than New? | First Capital Business Financing, USA