Most contractors and builders prefer to buy used equipment instead of new, even if they can afford to buy new equipment for their fleet. This is due to a variety of different reasons. Builders and contractors are aware that although there are certain benefits to purchasing new heavy equipment for their business, there are also some disadvantages attached to it. Before you make the decision about whether to buy new or used equipment, you need to make sure that you are properly informed about the matter.
“The following are a few reasons why some contractors prefer to buy used equipment over new”
Major Investment
When you opt for buying new equipment, you need to be prepared to pay a heavy initial payment. This is something that can be difficult for a lot of businesses, especially if they need to buy bigger machinery like road construction equipment. Buying landscaping equipment is still doable for smaller businesses as it is comparatively less expensive than bigger machinery like asphalt pavers or wheel loaders. Equipment of that size requires a capital investment that can put a major dent in your budget, and on top of that, if you are unable to pay the whole amount up front, then you will have to look into other financing options. That ultimately means that you will be paying even more to finance the equipment in the form of interest and fees.
Initial Depreciation
Unfortunately, it is an undeniable truth that new machinery depreciates much more quickly than used. While there is not any official depreciation rate that is available, you will find that new equipment loses more value in the first few years after purchase and the resale price of new equipment drops more in this time as compared to later in its life. When you buy used equipment, someone else already bore the loss that the initial depreciation deals to the equipment. That is why a lot of businesses find it easier to find used excavator for sale instead of looking for new ones.
ROI
Heavy equipment is a big investment, and as such, you need to consider the return you will be getting on your investment. Since new equipment loses resale value rather quickly due to depreciation, you must decide whether you are compromising your overall return on investment by buying new machinery. Making this decision requires you to rely on your judgment and experience. You should also look to your equipment dealer and finance team for advice on the matter before you make a final decision.
Availability
With new equipment, availability is also an issue since sometimes the new equipment listed for sale does not even exist yet. Custom orders also require additional time after the order has been placed before they are made as per the request. This means that it could take months before you will get the new equipment delivered. That may not be acceptable for your project’s timeline, and that time could have been spent working on the project.
No matter which way you choose to go with your purchase in the end, make sure you are well informed about what it would mean for your business. Only you can decide if buying new or used equipment is better for your business. You are the one who understands your personal situation and your business better than anyone else.