When looking to add equipment to your fleet, one option worth considering is purchasing used construction equipment from a reputable machinery company. Buying a used excavator or buying a used bulldozer or any used equipment can offer numerous benefits for businesses looking to save money without sacrificing quality.
There are five key benefits to buying used equipment, especially for small and medium enterprises. Most notably, one could look at the much lower price point of used equipment compared to brand-new ones. There are, however, other reasons aside from price, which make buying pre owned machinery a better option.
Obviously, used equipment is much cheaper than new equipment. This doesn’t have to be in terms of quality, because when you’re buying new, whether it’s a house or a piece of heavy equipment, a large sum of what you’re paying goes for the newness of the item, and not necessarily reflecting its true value. The fact remains that used machinery, when well-maintained and serviced, is just as valuable as a new piece of equipment, at a much cheaper cost. With used equipment, you’ll spend less money outright, which can greatly benefit your business by reserving free cash for other business investments, like operator training and hiring.
Let’s look at heavy equipment depreciation and see how it can affect your business. Basically, equipment depreciation is when an asset loses its initial value over a period of time until the point where it no longer has value. You can calculate this depreciation rate by dividing one by the number of years of an asset’s useful life. The equation would look like this: if your equipment with a useful life of five years and a salvage value of $1,000 costs you $10,000, the total depreciation in the first year is $1,800, and so on. (Given that its useful life of 5 years has a 20% depreciation rate.)
Used equipment worth less and less over time, but the biggest depreciation occurs within an asset’s first few years. When buying new equipment, you incur the first-hit of depreciation, which could amount to as much as half the machine’s value, as per the current market trends. However, buying used equipment means that the most depreciation has already taken place, which means that you’ve obtained a relatively newer machine without having had to pay the initial “brand” price.
Since new equipment costs more, it’ll also be more expensive to insure compared to used equipment. One, the upfront cost is higher, and two, you’ll end up paying higher costs because of increasing insurance premiums. So when something goes wrong with your new machine, you’ll overpay on insurance premiums as insurance companies assess the machine’s replacement cost at the value of a brand new one, even if yours has already depreciated.
The market for used heavy metal machinery is massive. The demand for used equipment is much higher than that of new equipment, primarily due to the fact that used equipment tend to stay in circulation longer than new equipment are built. Consequently, the used market consistently offers a more extensive range of equipment compared to manufacturers building new ones. Meaning that you’re likely to find the right machine at a reasonable price by exploring the used market.
Why does this matter? The construction industry is very competitive, and contractors must be very quick and adaptable in terms of resources to secure more contracts for their business. Opting for used equipment lets you acquire the needed machinery for any given project, which you can flip once the contract is out. Buying new, however, does not give you this convenience, as there are typically long waiting orders. In addition, buying and subsequently reselling used equipment within a short period will incur very little depreciation compared to investing in new machinery, as previously covered.
Buying used equipment often enables you to gain access to machinery that you or your operators are familiar with, featuring similar controls and overall tech. Whereas buying new may mean that you’ll have to adapt and train to its next-gen technology, stretching the time you have between buying the machine and actually using it. And so buying used has proved to increase uptime tremendously in that it involves less training.
Much like it’s the case with buying new, investing in used equipment has its drawbacks as well. However, companies like Al Marwan help contractors make their decision more confidently through a number of factors.
The process of buying a used piece of equipment takes a considerable amount of time and effort. The first step will be to scour the market for the right machine you’re looking for, with no real assurance of its availability. And after you find the machine, it’s crucial to research the supplier and verify their reputation in the field. Then, you should arrange for an safety inspection to ensure that the machine listing is accurate and that it’s in good working order.
You can make this process smoother by purchasing used equipment from a dependable supplier like Al Marwan. Our inventory features an extensive profile of used machinery, together with comprehensive service records and inspection reports. The visibility we offer on our used machinery line from inspection reports, 360 images, and updated service records ensure that you’ll receive machinery that’s dependable and accurate.
Used machines may have had accidents, service mishaps, or were inappropriately operated by their previous owners. Therefore, buying from a trusted seller with accurate listings and service records is critical not to end up paying more along the line. Al Marwan, for example, keeps accurate service records and usage histories of their equipment to offer full visibility around the buying process. This is in addition to the fact that most of our listed equipment were used by us on a regular basis in completing various projects around the region. Meaning that buyers can rest assured knowing that the machines were operated appropriately by tenured operators, and inspected and serviced on a regular basis.
When you decide to buy a used piece of equipment, Al Marwan can ease the process by providing a dependable machine you can trust. We sell a comprehensive line of highly-serviced CAT, Komatsu, Volvo, Wirtgen, among more machines as trusted resellers, and you can access our current offers on used equipment through this link. With over 45 years of experience, we’re the expert machinery suppliers you can count on.
Visit one of our yards or contact us to learn more about our equipment options today!