Buying Used Heavy Equipment
While it hasn’t always been this way the rise of new economic powers hungry to modernize along with continued development in the Americas and Europe have created a situation where the construction industry is now the world’s largest employer by sector. Not only that, but the construction industry is expected to grow by more than 50 percent over the next five years. Those are astonishing facts and should brighten the spirits of construction company owners everywhere. But if there is one truth about the contemporary construction business it’s this: competition is fierce. As such, anything that promises to provide even the slightest competitive advantage deserves serious consideration. And used heavy equipment is one of those things.
Six Good Reasons to Buy Used Heavy Equipment
If you’re in search of a competitive advantage buying used equipment may seem a bit counterintuitive. But there are actually a slew of great reasons to consider used equipment and here a six of them:
- Lower acquisition costs– Even a moderately sized mini excavator can set you back $50,000 or more. That’s nothing to sneeze at. When you purchase high quality used heavy equipment though you are going to save thousands of dollars on that piece of equipment. Savings that can then be used to address other needs like new tracks for your existing equipment or special attachments. In addition, buying used equipment means a much smaller sales tax hit.
- You get what you need when you need it– When buying a piece of new heavy equipment you’ll often need to wait for delivery, which could be some time. When you buy a piece of used equipment however, you can typically take delivery as soon as the payment details are hammered out and put it right to work.
- Increased versatility– Acquiring a piece of used heavy equipment is a great way to increase your company’s repertoire for relatively short money. Purchasing a piece of used equipment that’s different from what you have now will allow you to bid for and take on a wider variety of jobs than you could presently. You’ll become a more versatile organization almost overnight.
- Lower insurance costs– The cost of insuring a piece of used heavy equipment will be substantially less than insuring something brand new. Insurance premiums are typically based on the replacement cost of a piece of equipment. And the replacement cost for used equipment is much lower than it is for new equipment.
- Avoid the initial depreciation hit– It’s not unheard of for a new piece of construction equipment to depreciate 20 percent or more in the first year. That means that after a year you might actually owe more on your equipment that it is worth. When you buy a piece of used equipment however you avoid this depreciation hit.
- All the features you need– Progress in the heavy equipment sector tends to move much slower than it does in say, the computer industry. As such, even if you buy a piece of equipment that’s three of four years old it will likely have all or most of the same features you’d get in a brand new piece of equipment.
Factors That Can Influence the Cost of Used Heavy Equipment
Now that we have a better idea exactly why purchasing used heavy equipment can be a very smart thing to do we need to look at the various factors that can weigh on the cost of that equipment. If you keep the following considerations in mind when searching for a piece of used equipment you’re sure to end up with the best value for your money.
- Who made it– It shouldn’t surprise you that the make of the piece is going to influence the retail price. Some manufacturers have earned a reputation for producing tough, extremely durable equipment, while many of the more recent entries into the business still have a lot to prove. So while there are exceptions to every rule the rule here is that the proven name will cost you more.
- Age and hours– After the first year depreciation on a piece of heavy equipment slows considerably. So much so that the value of the piece can remain little changed for some time if the equipment is well-maintained. As time passes however, other factors come into play that will affect the value of the machine, with time itself (i.e. age) being the first and the number of hours on the piece being the second. Always insist on an accurate accounting of hours.
- Options – If you’re looking to increase the versatility of your company then a used machine with plenty of accessories and features may be the way to go. Just remember though that you’re going to pay extra for those bells and whistles. If you only need a piece of equipment to perform basic tasks then take a pass on the glitz. You’ll save a bundle.
- Reputation of the seller– Whether you’re buying directly from the previous owner or from an authorized reseller the reputation of that seller is an important factor to consider when contemplating what is a fair price. Authorized resellers allow customers to test the equipment and more often than not they’ll offer some type of warranty.
- General market conditions – Whether times are tough or things are booming it’s going to influence what a piece of used heavy equipment will cost. It’s supply and demand basics. When everyone is working overtime and used equipment is in demand it’s going to cost more. Conversely during a recession when a great deal of equipment is sitting idle the cost of used equipment is going to crater. Seasonal conditions can also impact price. As can the location of the used piece and the cost of transporting it to your yard.
Buying used heavy equipment is an idea that makes a lot of sense and can potentially transform your business into one that’s more versatile and more profitable than ever. Just be mindful of the factors that may affect cost in order to ensure you get the best bang for your buck.