Follow these 4 easy steps before you buy used heavy equipment.
If you are in the market to buy a used piece of heavy equipment, not only do you want to make sure you are getting a good deal, but there are a few basic steps you will want to follow before making your purchase.
- Make sure you are buying from a reputable dealer/vendor
- Make sure you are paying market or below market price
- Make sure the equipment comes with all paperwork and records
- Make sure you have your financing in place if you’re not paying cash
Is the seller you’re buying from reputable?
Just like buying a used car, would you buy it from a shady character or someone who you knew had a good reputation? Of course you’ll gravitate towards a dealer who has a good name. If you plan on financing the used equipment, most finance companies will also prefer you purchase the equipment from a reputable dealer. The reason for this is because the finance company only has one thing securing the transaction, that’s the equipment itself. Since the finance company is providing their capital they are the owner of the equipment until the customer pays off the agreed terms. Most of the time the finance company will do their own research on the dealer making sure there are no previous issues with the dealer. This ads another level of protection for you the consumer. We all know there are even better deals to be sought in the private party arena, but there are also some downsides to buying from a private party.
- Private Parties don’t have other equipment in inventory, so if you don’t like what they are selling you’ll have to find another seller.
- There is probably not a consumer reporting system with their previous transactions. When dealing with a dealer you can check them out on Yelp or BBB or other consumer reporting agencies. You can see what their previous customers thought about them and how their experience went during their transaction.
Are you paying market price for the equipment?
This might be stating the obvious, but paying above market price is just not the best financial decision when buying used heavy equipment. If you plan on financing the equipment, the finance company will not finance something that is more than the appraised value. Now some finance companies will allow financing the soft costs, which include shipping, installation, advanced payments, training costs and sales tax. There are a few useful websites that’ll help you determine if you are paying market price for a used piece of heavy equipment.
Make sure the seller has all paperwork and records before buying used heavy equipment.
One of the most important items you’ll want to make sure is there is no other liens on the equipment, this would include a UCC lien also known as “Uniform Commercial Code”. If you’re using a finance company, they will already verify if the equipment is free and clear of any type of liens before they finance it. If the equipment you are buying does not have a requirement to be titled, you will want to try your best to have the paper trail going back to the original bill of sale from the dealer who originally sold the equipment. The last thing you want is to find out the piece of equipment you are buying is stolen. Finance companies have other tools available to them that will allow them to search other databases for stolen equipment. This is another benefit of using a company to finance your used equipment. Now that we are living in a digital world, finding the users manual online shouldn’t be too difficult. Most manufactures will publish their manuals on their website, and if it’s an older or more unique model there are several forums you can find some great information and useful tips.
If you plan on financing the equipment, make sure you are pre-approved
If you have ever needed to use financing to buy a vehicle or buy a house, it is always a good idea to see if you were qualified before going shopping. Same rule applies when buying used heavy equipment, you will want to see what you are qualified for before looking for the equipment. The finance company will be able to get you an idea on the amount you are approved for and what the monthly payments will be. This can help you budget for your equipment and you should be able to determine from there if the monthly payment is affordable based on the amount of work you can complete with this piece of equipment. If you would like one of our business development managers to prequalify you, give us a call at 888-565-6692.
Heavy Equipment Loan – First Capital Business Finance