Why You Should Choose Buying Over Leasing and Renting
The question of whether to buy new or used equipment arises when people have to make buying decisions. Who won’t consider new equipment if given a chance? However, the buying decision cannot be made hurriedly because of the amount of money set aside for buying such equipment. When buying woods equipment, no one ties you to new equipment; you can consider any of the two and arrive at the best option for your business or company.
If you’re considering either leasing or renting, you’ll only consider the case at hand. Is the equipment suitable for finishing the current task? However, when buying, you need to have a bigger picture. You should seek to understand if what you buy will serve you for a longer time. Here you consider the value it will bring to your firm.
Making buying decisions for various woods equipment is a challenging task, especially when you have to choose whether to buy used or new equipment. You need to do a background check of both options and make an informed decision. Instead of buying new equipment for a high price, you can acquire used the equipment for a fraction of the cost and service it to ensure it meets your long term needs.
Therefore, choosing what to buy is a process that you must follow step by step. By understanding what factors determine the value you get from used equipment versus new equipment, you’ll be able to make decisions. Some of the factors that to look out for when assessing the value you’ll get from used equipment include;
The very first thing that should inform your decision is price. When going for used equipment, you have to at least make savings compared to purchasing new equipment. The price should be slightly lower or even half of the cost of new equipment. What you save after going for used equipment can help you acquire another piece of equipment.
What you should know is that you can get similar value using any equipment. Even though a new piece of equipment has additional features that the same equipment manufactured five years ago, they still do the same job. However, the difference lies in how much you spent trying to acquire the equipment. The used one offers similar value at a significantly reduced cost.
2. Rate of return on investment
When purchasing equipment, you need to get the value of buying it. Return on investment is the value you get from a piece of equipment compared to the cost of acquiring it. Has it fulfilled the needs that made you buy it? Can you say that it is worth the price you paid for it? It is a complex calculation that accountants and financial experts can handle.
The amount of capital you need to purchase a piece of equipment is the paramount consideration here. You do not have to cripple your business by buying expensive equipment when the cash reserves are not enough. You should consider how much it will cost you to get new stuff then compare it with the amount at viand. If that will be too expensive, you should go for used equipment.
No equipment does not depreciate. Within that first year of purchase, the equipment can depreciate at a significant rate. However, the rates of depreciation are not linear. Therefore, you have to make a consideration of the individual machine. You may find some equipment bought over ten years ago may still be capable of providing the same value as one bought two years ago.
Therefore, depreciation is never a big question when it comes to equipment. So long as it offers a similar service to a new one, you can choose to buy it. Besides, used equipment can retain value for several years if you maintain them well. Therefore, you should keep it properly, and you can get the same value as someone who bought a new version of the equipment.
4. Supply and demand
Supply and demand play in almost every industry. It also determines the pricing of equipment used in several industries. Whenever demand rises, or supply falls, the prices of equipment shoot because several businesses are trying to compete for the scare equipment. Also, when the demand falls, the supply goes up while prices come down.
Whether it is the market for new or used equipment, supply and demand will still affect. In buying equipment, you should make more decisions here. Remember, the supply and demand changes from one region to another. Therefore, you can consider the international market if the price at local markets is not favorable to you.
5. Market and economic conditions
The price for used equipment is also affected by the prevailing market and economic conditions. These two factors directly affect the cost of equipment. When the economic climate is not conducive, businesses play low-key. Most of them will choose to postpone their purchasing needs to a time when the prices are favorable.
If at all the purchasing decision has to be made despite the economic and market conditions, they’ll bargain hard for a suitable price. However, it is good to consider buying when the prices are low. Many companies dispose of equipment that they no longer use, and you may get them at a low price and get some excellent value from it.
The manufacturer of the product is a factor to consider. There are reputable manufacturers whose equipment commands a higher resale value than others. When buying used equipment, go for the brand that you believe offers more value. You can get the information from past users or your personal experiences. Some brands perform better than others, even in their used state.
7. Seller’s reputation
The dealer of the used equipment should also be a concern. You should seek to buy from a reputable dealer. Before purchasing the used equipment, they should be able to provide records. You should know who has owned the equipment before and what the service records are. It goes a long way in ensuring credibility and transparency.
If the dealer or equipment handler is of questionable character, then you may have to do better background checks of the equipment. Otherwise, the machine may have poor handling previously or in some circumstances, not maintained well.
8. Equipment age and condition
The equipment age is something you should know. When buying used equipment, you should be aware of how long it’s been in use so that you can attach a specific value to it.However, you should not use age to make your final decisions. There are more critical things to consider than age, such as the overall condition and appearance of the equipment.
The condition is part of what you can use to determine the price of the equipment. If the owner maintained it well even repainted just before resale, they could sell it to you at a higher price. That will also help you save a little more on the maintenance, already done by the owner.
New or Used? How to Make a True Decision
The key to making such a buying decision for woods equipment is what you need. It’s not just going for something latest and with better features. It is getting what will help you accomplish your needs in the long run. Therefore, in making such decisions, you need to take both time and consideration on several factors. The factors mentioned above can help you decide whether going for a second-hand option is viable.
There is a process you need to follow in making such decisions. As mentioned earlier, you should not make decisions hurriedly. You need to make step by step considerations. Here is the process you should follow in making your decision.
- You should understand what your company needs now and in the future
- Do some due diligence on the options you have
- Compare what value you will get from new or used equipment.
- Ensure the used equipment doesn’t have more operational costs and also meets your needs.
- Research on the prices, which one is cheaper? Also, how easily can you acquire the parts?
- Based on your research, challenge the seller with as many questions as possible
Advantages and Disadvantages of Used Woods Equipment
Before purchasing equipment, you need to consider the pros and cons of buying either new or used equipment. Here is a list of what you should consider.
- Price – As you know, equipment depreciates so fast in the initial years. Therefore, buying slightly used equipment may save a lot of money for you.
- Good deals – Some used equipment dealers will offer to inspect the product, maintain it for a certain period, and provide any other product support you need.
- Budget – Increase your fleet on a small budget. When you buy used equipment that serves you well, you save on the amount you could have spent buying new equipment.
- Unknown dealers – Most times, you risk buying stuff that is not genuine. Lack of certification of some users is a serious concern.
- Old equipment – Most of the equipment on sale are older models. Therefore, you may risk getting outdated equipment, which may not be efficient as new models.
- No warranty – When purchasing from a private owner, you’ll not get a warranty for the equipment. However, dealers offer some warranty if you bargain for it.
- Poor conditions – If you don’t employ a qualified mechanic to check the equipment, you may risk buying defective equipment and maintenance will be costly
- Price misrepresentation – You may have to deal with some hidden costs if the seller is dishonest with the proper condition of the equipment.
Advantages and Disadvantages of New Woods Equipment
- Higher productivity – New equipment is usually of the best quality. The chance of breakdown is almost zero. Therefore, you may use it for more extended periods getting more values.
- Comfortability – You are more comfortable. By virtue that you’re the first user, you have no doubts as to the previous owner or poor maintenance from someone else.
- Buying – The buying process is more straightforward than leasing. You do not have to negotiate, sign agreements or contracts before buying the equipment.
- Maintenance – You’re responsible for determining when to maintain it. Since you’re the first owner, you’ll create your maintenance schedules.
- Longer lead times. – Once you make an order, it takes a while to get it delivered to you. Therefore, you should be consulting with your sales representative.
- Cash flow. – After purchasing new equipment, you may have to pay for it in full upfront. Many business people may not manage that.
- Outdated equipment – You may get stuck with outdated equipment. The interest in upgrading to newer models may fade away soon when the stuff you have is no longer the latest version.
5 Awesome Tips to Protect Yourself When Purchasing Used Woods Equipment
- Buying used woods equipment may come with some risks. Many businesses fear saving costs by buying used equipment because they think that the risks may be too many and outweigh the benefits. However, there are ways you can ensure that you are not negatively affected by your decision.
- Buy from a reputable seller. You should take the time to analyze the legitimacy of the seller. Online reviews and other sources should help you decide.
- Do a proper background check. You may risk buying stolen equipment if you do not do a proper background check on the seller. Therefore, you must check their ownership of the equipment
- Inspect the equipment. If you do not know how to inspect it properly, you can hire an expert to help you check the equipment.
- Understand the terms of purchase. Online transactions become risky sometimes. Therefore, if you’re buying from an online seller, you must be careful not to pay for something you may not even receive.
There are many differences between used and new woods equipment, as you may have noted in this article. From the factors that you should consider before buying equipment to the advantages and disadvantages of buying each. Therefore, before purchasing equipment, you should analyze the differences and make a decision that you won’t regret. The option you choose should be less costly and also offer more value than the other.