6 Benefits of Buying Used Heavy Equipment
There are plenty of good reasons to buy used construction equipment rather than new equipment, especially in today’s competitive marketplace. One of the primary advantages of buying used heavy equipment is its lower price, but it has other advantages as well. If you’re a contractor looking to invest in a new piece of heavy equipment to expand your capabilities, then consider these benefits of buying used construction equipment:
1. Lower Upfront Cost
One of the most obvious reasons to buy used machinery is that it’s much less expensive than new equipment. When buying anything new, whether it’s a car, house or piece of heavy equipment, a significant portion of what you’re paying for is the newness of the item and not necessarily its true value. The fact is that used heavy equipment, when well-maintained and properly serviced, is just as valuable to your business as a new piece of equipment but at a fraction of the cost. With used equipment, you’ll spend a lot less upfront, which can get your business up and running faster while reserving your cash for other business investments, like hiring and training operators.
2. Avoid Depreciation Loss
As mentioned, when buying new equipment, you’re paying for its newness. But new equipment will eventually stop being new, meaning its value will diminish over time. This reduction in value, known as depreciation, is a natural cost of doing business. Used items continue to be worth less and less over time, but the biggest depreciation occurs within a machine’s first couple of years. When you buy new equipment, you absorb the primary depreciation cost, which may be up to half of the machine’s cost, depending on current market demands. By buying used equipment, the major depreciation loss has already happened, meaning you can get a newer piece of equipment without paying the initial sticker price.
3. Reduced Insurance Rates
Because new equipment costs more, it’s also more expensive to insure than used equipment, so the upfront cost is higher and it will also have higher carrying costs due to greater insurance premiums. If something does go wrong with your new machine, you could end up overpaying on insurance premiums as insurance companies will assess the equipment’s replacement cost as the value of a brand new machine — even if yours has already depreciated.
4. More Selection
The market for used heavy equipment is massive. Because there’s much more demand for used equipment than new equipment, used equipment stays in circulation at a higher rate than new equipment is manufactured. It’s projected that the global market value for used heavy equipment in 2020 will reach nearly $90 billion. This means that there will continue to be a much wider selection of equipment in the used market than in new inventory. You’ll likely have a better chance of finding the right equipment for your business at the right price when turning to the used heavy equipment market.
5. Greater Contract Flexibility
Construction is a highly competitive industry, and contractors need to remain flexible to fulfill more contracts quickly. With used equipment, you can easily acquire the right machine for an upcoming project and then re-sell it when the contract is complete. You might not find this flexibility with new equipment since there are usually wait times for new orders. Additionally, you’ll experience limited depreciation when buying and re-selling used equipment in a narrow time frame compared to an investment in a new machine.
6. Quicker Uptime
When you buy used equipment, you can typically find machines that you or your operators are already familiar with – they’ll have the same or similar controls and technology. When buying new equipment, you’ll likely be faced with a new generation of technology, which will come with a learning curve. Buying used equipment can improve uptime because there may be less training involved.