Pros and Cons of Buying Used Equipment
This will be the second blog post in a three-part series in which we will discuss buying used vs buying new when it comes to equipment for your business—though in this post we’re more specifically going to address the pros and cons of buying used.
Used equipment can offer a lot of advantages, but it is not without its share of negatives. Every business is going to need to buy equipment at some point, and sometimes buying used makes a lot of sense. But when is it a good idea to buy used, and when would you be better off buying new? Better yet, what are the biggest pros and cons of buying pre-owned tools, machinery, or equipment?
These are the questions that we’re going to be addressing in this blog post.
Buying used is less expensive
Used equipment is generally going to be less expensive than new equipment—and for good reason. Used equipment has already depreciated in value at least a little bit due to wear and tear. It might also be a little ‘behind the times’ technologically speaking, though this isn’t always a big deal.
Machinery with an older LED display, for example, might not have any serious advantages over a newer piece of machinery with a full-color LCD computer display. If both of them will do the job and do it right, then you might be able to skip the ‘luxury’ of the newer full-color screen in order to save money.
As a general rule, buying used is going to cost you less—at least in the beginning.
You can procure used equipment with affordable financing options
Sometimes, buying used is inexpensive enough to prevent you from having to bother with payments, loans, or financing at all. When this happens, you can pay in cash and own the piece of equipment outright without any additional or recurring costs (aside from maintenance and upkeep costs). This is especially good news for businesses that are credit challenged or that can’t get approved for a bank loan.
Some used equipment can still be rather costly, especially some types of construction or industrial equipment. In these cases, many equipment financing companies have more liberal financing policies that your typical bank. Instead of utilizing valuable cash flow, extended payment terms are available to make even used equipment purchases more affordable.
Buying used can be risky
Some people and/or businesses buy used equipment because doing so can offer a better bargain—but it can also come with a risk. Since you aren’t the first person to have owned it, there is a possibility that it was not always well-taken-care of. The previous owner might be able to tell you a lot about where it came from, how it was used, and what you can expect—but sometimes it’s nearly impossible to get this kind of background.
So what do you do then?
Unfortunately, there is often nothing to do but to choose whether or not you are willing to take the chance. Sometimes, buying used is a ‘roll of the dice’. You’re never quite sure how long it is going to last, how much it could cost to repair, or how long it will be before you are forced to buy the same thing again.
Another note on ‘Refurbished’ equipment:
It should be noted, once again, that buying refurbished equipment will usually negate this issue. Refurbished equipment is equipment that has been thoroughly re-vamped to be basically ‘like new’, and almost always comes with both a warranty and a condition report that fills you in on where it came from and what was done to it to restore it to its factory condition. Refurbished equipment might not be as inexpensive as used equipment, but it is often a less expensive option than buying new and should always be considered when you are getting ready to make an equipment purchase.
Used equipment does not come with a warranty
Some people tend to care more about warranties than others. I’ve known people who loved to take their chances on used gear, and I will admit that I have seen them get some incredible deals. But I have also known people who have taken chances and gotten burned when their purchases broke down a week or a month later.
And of course, one of the worst things about buying used (especially if the tag reads ‘as is’) is the fact that you don’t usually get a warranty. If you buy used equipment and it doesn’t come with a warranty, then you’re going to be personally responsible for either repairing or replacing it if something goes wrong.
Again, refurbished equipment will not give you this same problem. Refurbished equipment usually always comes with a warranty.
Who should buy used equipment?
If you run a small business and don’t have a lot of start-up capital, then buying used can get you started for less money up-front. You might also be able to buy used if what you are buying is not going to be a critical part of your daily processes. If it is a tool or a piece of equipment that you don’t use on a regular basis, then it might make sense to buy it used so that you can spend more on new gear that you will be using day-to-day.
You could also benefit from buying used if your organization has a maintenance department that could potentially perform its own repairs on the item. This could save you money and reduce risk on your end.
Make sure to check back for part 3 of this three-part blog series.