Purchasing used equipment is an excellent way to cut costs in your business, especially if you’re just starting out. It’s usually cheaper to buy and insure preowned machinery than new models, which may enable you to get more equipment and increase your output.
However, if you work with a disreputable seller, you may end up with poorly maintained equipment, which can hurt your bottom line. There’s always the risk that preowned machinery will require extensive, costly repairs.
So you’ll need to do your due diligence and make sure you’re getting a quality product before you agree to buy it. Here are some tips to help you find used equipment that will function well for your business.
Tips for Buying Used Equipment
Unless you have enough cash on hand to buy the equipment you need outright, you’ll need to secure financing. If your business is new, you may have trouble getting a traditional bank loan.
Banks will typically only lend money to businesses that have been in operation for at least a year. You’ll also need to have a good business credit score and solid revenue before you can get a regular business loan.
However, if you have bad business credit or you’re just starting your company, microlenders may be a good option. They’re non-profits that work with businesses that banks won’t. They usually offer smaller loans of $50,000 or less. But since you’re buying used equipment instead of new, that may be enough to finance your purchase.
Work With a Reputable Seller
Once you have your financing sorted out, you can start shopping for the equipment you need. When buying preowned, it’s crucial to work with a reputable seller to ensure you get well-maintained machinery that works.
To figure out if you can trust a used equipment dealer, do your research. Find out how long they’ve been in business and ask around in your community to see if they have a good reputation. You should also read online reviews and visit the Better Business Bureau website to see if they’ve had any customer complaints.
If you’re purchasing from a private seller, ask to see the original sales invoice to make sure they really own the equipment. If they no longer have it, you can ask for the product identification and serial numbers instead. Local police can run them to verify that the equipment wasn’t stolen.
Some pieces of equipment also have titles, just like motor vehicles. Check to make sure the title is clear and doesn’t have any liens against it. It’s also a good idea to look at the maintenance records of any equipment you’re buying. That way, you can be confident you’re buying a machine that’s in good condition.
Arrange an Inspection
If possible, you should always inspect used equipment in person before you buy it. Although shopping for preowned machinery online is becoming more common, it may not be the best idea. Photos and videos don’t show every angle of the machine, which could cause you to miss potential problems.
If the machine is located far away and you don’t have time to travel there, you can hire an inspector to look at it for you. They’ll be able to test run the machine and inform you about any issues that may need to be fixed. Then you’ll have all the information you need to decide if it’s a good buy.
Buying used equipment can save your business money, but not if you end up with a machine that’s in bad shape. That’s why it’s essential to do your homework before you make a purchase.
Don’t take the seller’s word for it that the machine is in mint condition. Inspect the machine thoroughly, perform a title search, and dig into the maintenance records to spot potential problems before you sign on the dotted line.
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.