Advantages of buying used construction equipment
Is your construction equipment making money, or are you spending the majority of your profits on the paying for your equipment? Construction equipment ownership, whether new or used, requires a company to work toward paying for it. However, there is a much more inflated cost associated with buying new, which is why you have to ask yourself, “Is owning new worth it?”
Quality used equipment will deliver the same performance as new equipment, but costs much less to buy. And that, helps contractors increase profits and grow their business. That’s why more often than not, buying used construction equipment is the right way to go.
Let’s take a look at the reasons why.
It’s cheaper to buy used.
The price of new equipment is increasing at an alarming rate thanks to mandated changes from evolving emission regulations. With the introduction of Tier 4 engines, the average piece of construction equipment has jumped in price between 15 and 20 percent. Today, more than ever, the pricing gap between new and used construction equipment is important to pay attention to.
Construction equipment resale values follow a similar pattern to the automotive industry. The moment you put that first hour on a new dozer, excavator or wheel loader, its value drops by 20 to 40 percent. That’s a huge hit when you’re talking about the hundreds-of-thousands-of-dollars you’ve paid for a machine.
For example, if you purchased a $500,000 dozer, you’ve lost an estimated $100,000 worth of an equipment value on the first job!
The financial advantages don’t just stop with that initial purchase price though. You also have to consider the taxes you have to pay on your purchase, the insurance and the interest charges on financed purchases. Of course, you’ll have those same considerations on the purchase of a used machine; however, all of the extra expenses should be lower since you’re starting with a lower purchase price.
Cash flow management
Whether you intend to purchase a piece of equipment with cash or finance it with a loan, you have to look at what that investment will mean for other areas of your business. The lower purchase price of buying used equipment means you’ll have less pressure every month to make that payment, have more financial resources to buy additional equipment or be able to use the money you saved to invest on other things for your business.
Get more for your money
Not all construction equipment is made to the same quality standards. And, chances are you have a brand preference when it comes to the equipment your crew runs. If you want the opportunity to own the best equipment, but you don’t have the checking account balance to be able to pay for a brand-new machine, you have a decision to make — settle for a new inferior machine or buy the brand you want at a used equipment price.
The resale value of construction equipment takes the biggest hit in the first year of operations. After that, well-maintained equipment tends to hold its resale value for many years to come. By avoiding that first year hit, you can turn around and resell a machine you’re not using anymore without the fear of being completely upside-down on your loan. Its a fleet management decision that will give your company a lot of flexibility.
Better selection and availability
Often, buying new equipment means waiting for your machine to be manufactured, sometimes for months. When you need a machine right now, buying used equipment is your best option. The internet has made it easy to get exactly what you’re looking. All you have to do is go to reputable used equipment website, like IEDAused.com, and specify what you are looking for. You’ll be able to search the used equipment inventory from members of the Independent Equipment Dealers Association (IEDA), an organization committed to delivering the best quality used equipment buying experience. And, if you don’t find exactly what you want there, any of the IEDA members can help track down exactly what you need.
As you can see, there are a lot of advantages to buying used construction equipment. So, if you’re more interested in owning your equipment fleet, instead of it owning you, buying used equipment is the right choice.