WHY BUYING USED EQUIPMENT MAKES MORE SENSE THAN EVER
"The greatest danger in times of turbulence is not the turbulence - it is to act with yesterday’s logic."
- Peter Drucker
It’s hard to believe that the month of January is already over. It appears that the Bank of Canada has paused reducing interest rates for the foreseeable future and many Canadian marketplace factors are highly uncertain because of tariffs and a lower Canadian dollar. During these uncertain times, the economy still moves forward, and businesses still require financing for equipment and/or working capital. DEROTTO can be a valuable resource during these times – let us help you and your business navigate this turbulent period by providing creative financing alternatives!
With the introduction of tariffs, more businesses will look to the used equipment market to avoid any potential increase in price. Much like in 2009 and during COVID, the team at DEROTTO believes that if tariffs persist, we’ll be entering a period where the demand for used equipment is higher than the demand for new equipment. Financing used equipment is DEROTTO’s specialty – At least 90% of DEROTTO’s business is used equipment financing.
Below are three lesser-known facts about financing used equipment. Are you aware of all three?
It doesn't matter if a business is purchasing equipment (new or used) from a private seller or from a vendor - both can be financed.
Banks and credit unions will finance used equipment.
The majority of lenders in DEROTTO’s network specialize in financing used equipment.
Financing used equipment is DEROTTO’s bread and butter; We are built for these times and are ready to help you and your business save money!
6 ADVANTAGES OF BUYING USED EQUIPMENT!
Avoid Initial Depreciation
New equipment is no different than new cars in that the minute you drive it off the lot, it depreciates in value – as much as 20% to 40% in the first 12 months.
Affordability
Just because a vendor is offering 0% financing for new equipment doesn't make it more affordable. Many times, the vendor inflates the prices of equipment to offset the 0% interest cost.
Holding the Value
Although used equipment has depreciated, it can hold its value if it’s well-maintained. When it is time to sell, it is actually possible to get close to what you paid if you sell at the right time. It is very important to keep a detailed record of all maintenance records for future resale value.
Knowing the History
When buying new equipment, it may have the uncertainty of potential future issues. Almost all equipment brands seem to have a “lemon” model. A positive aspect of used equipment is having the option to do a simple Google search and look at the reviews on that equipment to see if there are any potential issues with the certain make and model.
Fast
In many situations, the order time with new equipment can be months. Many manufacturers are still feeling the supply chain issues from COVID. With the introduction of tariffs, this will only negatively affect manufacturing time frames.
Large Selection
The Canadian used equipment market is massive. And that’s good news for buyers. That means more choice of equipment than any one brand could ever offer. Whether you’re looking for construction, transportation, mining, oil & gas, or farm equipment, there are literally thousands of items available for sale at any given time across Canada.
ALWAYS DO YOUR HOMEWORK WHEN BUYING EQUIPMENT PRIVATELY!
Many businesses will look to acquire equipment via private sales. When it comes to purchasing equipment privately, there is more to the process than making sure you’re getting the machine that meets your needs. People will do inspections and safeties and other things to make sure the machine is functional, but many people forget to do their homework to make sure there are no liens or encumbrances registered on the equipment.
You can’t just take the seller’s word that there are no liens. Sometimes the seller is aware and sometimes the seller is unaware there are liens on the equipment. If you purchase a piece of equipment that has liens on it, you will adopt those liens once the equipment is in your possession.
When you purchase any kind of equipment privately you should always do a lien search. It is inexpensive and easy to do. One website that can help with this is https://www.easyppsa.com/easy/. Another thing people often forget to do is use the service of Carfax (https://www.carfax.com/). Carfax will allow you to see the vehicle’s history by entering the vehicle’s VIN (vehicle identification number). Both of these steps are fast and easy to do, and they could save you money and unforeseen headaches.
A lien can come in many forms. It can be a mechanics lien from a previous repair on the equipment. The seller could have a judgment registered against the equipment. The seller’s bank may have a general security agreement (GSA) registered against the equipment. Basically, with a GSA the seller is unable to sell the equipment without his bank’s permission. These are just a few examples that could come back to haunt you.
It's like if you purchased a house without doing a property search. If there were unpaid property taxes on the property and you purchased the property without doing a search on the property you would adopt the unpaid tax bill – NOT fun.
One of DEROTTO’s specialties is helping businesses finance used equipment via private sales and you can rest assured that DEROTTO will do all the necessary searches to make sure the equipment is free and clear of all liens and encumbrances.
If you have questions on this topic or other topics related to equipment financing and working capital financing, then reach out to DEROTTO – we look forward to serving your needs.
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