New vs. Used Heavy Equipment: Which Should You Buy?

New vs. Used Heavy Equipment: Which Should You Buy?
New vs. Used Heavy Equipment: Which Should You Buy?
Author: Small Business Expert | January 16, 2023 | Topic: Used Equipment

New vs. Used Heavy Equipment: Which Should You Buy?

Whether you run a construction business, landscaping company or mining operation, building out your equipment fleet is essential. When it's time to add a machine to your fleet, you have two options — buying new or used. Understanding each side of the coin can help you determine the right direction for your business.

Pros of Buying New Heavy Equipment

When you're looking to build out your fleet, your first thought may be to buy new equipment. If this option is within your budget, it can come with many benefits for your operation. The advantages of new machines include:

  • Smooth operation: Since new machines have zero operating hours under their belts, they operate at peak performance. You're far less likely to run into performance issues on the job, and maintenance costs are usually lower for brand new heavy equipment.
  • Latest tech: With all of the recent technology developments, the newest machines on the market offer impressive features for safety and productivity. If you're looking to leverage the latest tech, shopping new is an excellent choice.
  • Warranty: All new machines come with a warranty, so if you experience performance issues right away, you can protect your investment.
  • Tax privileges: The Internal Revenue Service (IRS) recognizes new machinery as a capital asset investment, so you can write off a percentage of the expense. The tax savings with your new purchase can be a notable capital offset against the upfront price.

Cons of Buying New Heavy Equipment

Before committing to a new purchase, consider the cons of new equipment and whether you're willing to face them. Cons include:

  • Financial requirements: You're paying for trouble-free operation and the latest technology, which may be enough to motivate making the purchase. However, new machine prices are not within reach for every operation. If you run a small business, or you've just started building your fleet, the high price tag may not suit your budget.
  • Depreciation: On top of the large financial commitment, new machines come with steep depreciation within the first few years of your purchase. While there's no set rate for depreciation, most accountants will tell you the value drops the most in the first few years.
  • Lost return on investment (ROI): When buying a machine, you have to consider how the money made with the machine will make up for the money spent to purchase it. Depreciation, paired with the large capital commitment, may make it challenging to get a high ROI. If your machine purchase ends up bringing a lot more business for your company, the purchase may be worth it. You should consider your ideal ROI before you commit to a sale.
  • Availability: While there is often a large selection of new machines, getting the machine you want when you want it is a different story. Many listings are up for sale but aren't actually available yet. If you buy a specialty machine, you likely have to wait for it to be built. Consider the turnaround time and whether you can afford to wait.

Pros of Buying Used Heavy Equipment

While used equipment may not offer the newest technology or zero-hour performance, it comes with many benefits:

  • Lower cost upfront: Used machines typically sell at a lower price than new ones, even when the performance is still about the same. This fact can lead to a higher ROI and help you build out your fleet quicker than you could with brand new prices.
  • Selection: Used equipment inventories are extensive, ranging from last year's models to reliable machines from the past decade. Shopping for used machines also means you get your heavy equipment shortly after purchase, rather than having to wait for it to be built.
  • Lower insurance: With used machines having a lower purchase value than new equipment, your insurance rates could be lower too. This fact can also contribute to a higher ROI.
  • Less depreciation: Since the depreciation rate tends to drop dramatically or plateau after the first few years, your used machine may sell for close to the same price you bought it. This is especially true if you keep up with maintenance requirements. NOTE: The resale value of your equipment is not guaranteed to increase.
Pros of Buying Used Heavy Equipment

Cons of Buying Used Heavy Equipment

Used equipment can help you get the most from your investment, but cons include:

  • Older technology: While used heavy equipment comes with many cost savings opportunities, you may not find the same technology. If you're looking for advanced safety features or high-end efficiency systems, buying used may not be right for you.
  • Inspections required: Used machines don't come with guaranteed performance and quality like new machines, so inspections are a must. You can work with a third-party inspector or go to an authorized dealer who performs a detailed inspection with documentation.
  • Seller research: While there are many reliable used equipment sellers out there, not all of them are the best source. It's crucial to conduct research before committing to a seller. Look for a reliable dealer and stick with them.

The Benefits of Buying Used Equipment From a Cat® Dealer

Choosing a Cat® dealer comes with many benefits for your business, including:

  • Professional support: Your local Cat dealer has your best interests in mind, and they will guide you through the purchasing process, so you feel confident in your used machine. They can help you find the best model for your needs and budget, and they provide after-sale support. With a Cat dealer on your side, you can save time in the purchasing process and focus more on your business.
  • Equipment range: Your Cat dealer maintains a wide selection of machines, from construction and mining equipment to attachments. With extensive machine options, you can make the right purchase for your fleet.
  • Value: Cat machines hold their value far better than other brands on the market. Thanks to their longevity, efficiency and reliability, most Cat machines will uphold a strong resale value with the help of comprehensive maintenance from your Cat dealer, detailed service records and official Cat partsNOTE: The resale value of your equipment is not guaranteed to increase.
  • Confidence: You can trust Caterpillar to meet your high performance standards, and working with a Cat dealer will also instill confidence in your used purchase. Most used machines come from dealers' rental fleets, lease returns or trade-ins, and they thoroughly inspect every model before putting it up for sale. You can always ask us about the inspection and appraisal before you buy.

Shop Used Heavy Equipment Online

At Cat Used, you can find a machine within your budget. Find your local dealer today, and purchase your next used machine with confidence.

Shop Used Heavy Equipment Online

Browse Used Equipment

Shop Used Heavy Equipment Online
Shop Used Heavy Equipment Online