Heavy construction equipment is a significant component of every construction company. However, most small-scale or start-up construction companies do not have adequate finances to purchase brand-new heavy construction equipment. For such companies, there are two options they can utilize to gain access to heavy construction equipment.
The first option involves renting or leasing heavy construction equipment, while the second option involves buying used equipment. In most cases, renting can often be an expensive endeavor in the long run, considering the rental company has to make a profit. However, buying used heavy construction equipment can provide a more suitable solution because it is much cheaper to buy used equipment than new equipment.
With that in mind, here are three benefits that used equipment buyers enjoy from buying used heavy construction equipment.
Low Purchase Price
Suppose you want to buy a relatively newer model earthmover, but you are not willing or can't afford the price of a new one. Don't worry, because you can get newer heavy construction equipment at a discounted rate if you opt for a used earthmover.
Heavy construction equipment starts to depreciate as soon as it gets bought. Hence, as a used equipment buyer, you can save thousands of dollars on new equipment models by opting to buy used heavy construction equipment instead of brand new ones from a dealership.
Lower Insurance Rates
If you buy a new piece of heavy construction equipment, insurance companies will use the purchase value of a new piece of equipment to determine the monthly premiums you will be paying. Since the equipment is brand- new, the insurance company will give you a high valuation for it, and thus you will pay hefty insurance premiums every month.
However, if you opt to buy used heavy construction equipment, the insurance company will have to deduct its depreciation from its purchase value. As a result, you will get a low valuation of the equipment, and thus you get to pay lower premiums.
Therefore as a used equipment buyer, you get to save money on insurance premiums by opting to buy used equipment instead of new equipment.
Minimal Depreciation on Your Books
If you run a construction company, your books determine the net worth or value of your company. Thus, when you want to apply for a loan, most lenders will want to look at your books.
Now, as mentioned earlier, new heavy equipment tends to depreciate a lot faster than used equipment. Thus, when you buy a fleet of new heavy construction equipment, you have to include the yearly depreciation in your books, lowering your company's value.
However, used heavy equipment depreciates a lot slower than new equipment. Hence, the amount of depreciation you record in your books doesn't dramatically affect your company's valuation. Therefore, a used equipment buyer gets to enjoy a more stable net worth valuation than a new equipment buyer.