A BUYING GUIDE FOR USED EQUIPMENT
Construction equipment has a long life. It’s not unusual to see construction equipment used for twenty or more years, which is why buying used equipment makes sense for many contractors. Most contractors first consider buying used equipment for one reason: It’s less expensive than new equipment. If you’re starting a new venture, buying used equipment can make it feasible to purchase several pieces of equipment for the cost of a single piece new. There are other reasons to buy used construction equipment, as well.
BUY USED EQUIPMENT TO AVOID DEPRECIATION
Buying used equipment has financial benefits beyond a lower purchase price. One benefit is avoiding major depreciation. Most heavy equipment loses 20 to 40 percent of its value within a year of being purchased. After that, depreciation schedules tend to be linear.
Here’s a chart showing the typical depreciation for a forklift:
If you want to avoid major depreciation, consider used equipment. After the first year, depreciation schedules for heavy equipment are linear.
For depreciation purposes, many types of heavy equipment have a useful life span defined by the IRS. For trucks, it’s five years. And for many other types of construction equipment, it’s seven years. But many types of construction equipment are used well beyond that span.
RETURN TO WORK WITH LESS TRAINING TIME
Buying used construction equipment can also cut down on training time. New equipment often means new controls and cab interfaces, which means you’ll need to spend time training operators to use the new controls. If you purchase used equipment that’s similar to what you already own, you’ll avoid spending additional time training operators— meaning you can return to work more quickly.
CHOOSE NECESSARY TECHNOLOGY INSTEAD OF EVERY UPGRADE
Technology is another reason to consider buying used equipment. Many businesses suggest buying new equipment because you’ll receive better technology. Historically, construction equipment has been slow to adopt new technology. That means you’re likely to find the right technology on machines that are a few years old.
That’s not to say we think you should avoid new technology. If there are improvements that will have a big impact on your business’ productivity, consider buying new equipment. If the differences between the newer and older models won’t affect your bottom line, used equipment could be a better choice.
7 TIPS FOR BUYING USED CONSTRUCTION EQUIPMENT
Buying used construction equipment can save you money and time, but buying the wrong used equipment can mean more downtime and repairs. It’s important to choose well-maintained equipment.
Here are seven tips for buying used equipment. They cover maintenance, service records and other essentials to consider.
1. Choose Used Equipment With a Good Service History
Equipment that’s regularly serviced and well maintained will have a longer lifespan. A good preventative maintenance schedule identifies wear and tear early, preventing it from causing major damage to a machine. Regular maintenance records are also an indicator that the previous owner took good care of the equipment, which makes future problems less likely.
Be sure to view the service record for equipment before purchasing. The dealer or previous owner should have copies of maintenance reports and records of when major services were completed.
Make sure that hydraulics, suspension systems, engines and transmissions were serviced according to manufacturer guidelines. These major systems are expensive to repair, so regular maintenance is particularly important.
Ask to see oil-sampling records, which is one of the best indicators that used equipment is well maintained. For Cat equipment, they are called Scheduled Oil Sampling or SOS records. Although not strictly necessary, oil sampling can help an operator optimize his equipment and catch problems early.
Beware of recent repairs. Sometimes repairs are necessary and can add value to the equipment. If there’s a history of major repairs shortly before the sale, it can be a sign that the equipment wasn’t cared for appropriately.
2. Have Important Systems Inspected
Some parts of construction equipment are easier to repair than others. Other areas are expensive and time consuming to repair. If they fail, they can cause considerable downtime. Pay particular attention to these five areas:
- Engine and transmission: Does the engine smoke when it starts? Does it start smoothly?
- Chassis: Is there extensive wear on bearings, mounts, or spring coils? Does the equipment start and stop appropriately?
- Hydraulics and work tools: Are there welds on the backhoe or loader arms? Are there signs of extensive damage?
- Tracks/Tire systems: Are the tracks or tires well worn?
- Cab: Is the cab comfortable? Are the controls easy to use and operable? Is there extensive vibration or other issues that will make work difficult?
If you’re comfortable with heavy equipment repairs, you may be able to inspect the equipment yourself. If not, hire a mechanic or a technician to conduct an inspection.
3. Be Aware That Equipment Age and Use Hours Matter
Newer equipment isn’t always better than older equipment, and that’s particularly true when it comes to construction equipment. Some types of construction equipment can last for twenty or thirty years. It’s easy to fall into the trap of thinking that newer is better.
When considering used equipment, consider the number of hours that it’s been in use. Older equipment with lower use hours and a good maintenance record can be a much better investment than newer equipment with a high number of use hours.
Here’s a chart showing typical hours of annual use:
4. Choose Equipment From A Reputable Manufacturer
When it comes to farm equipment, a reputable manufacturer is important. A high-quality manufacturing process means that equipment is better made. It also makes it easier to find qualified service technicians and replacement parts for used equipment.
Warranties are another benefit of working with a reputable manufacturer. Many equipment dealers offer warranties on both new and used equipment. A warranty can make it easier and less expensive to repair or replace parts.
Finally, repairs of equipment from reputable dealers tend to be easier and last longer. Equipment that’s manufactured by Cat often contains modular components. Transmissions, engines and hydraulics are all examples of Cat modular components that can be reconditioned, or even completely rebuilt. This means that the life of your equipment can be extended considerably.
Construction equipment from lesser-known dealers doesn’t always offer the same benefits. If you choose this equipment, you may find yourself struggling to find qualified service technicians or trying to piece together replacement parts.
5. Make Sure Replacement Parts Are Made by the Original Equipment Manufacturer
The manufacturer of your equipment matters, and so does the manufacturer of replacement parts for your equipment. Used equipment could have a few replacement parts, or it could have extensive replacements of major equipment systems.
When you’re considering used equipment, check the manufacturer of any replacement parts. If possible, choose equipment with replacement parts manufactured by the original equipment manufacturer (OEM parts). These parts are specially engineered to work with your equipment, and will allow the machine to be used to its full capacity.
Another benefit of OEM replacement parts is financial. Many dealers offer warranties that cover only the use of OEM replacement parts. If the seller used off-brand replacement parts, you may find that your warranty is invalid through no fault of your own.
6. If Buying Older Equipment, Choose Popular Models to Find Replacement Parts Easily
Sometimes you need specialty or rarely made equipment, but other construction equipment, like cranes, skid steer loaders, and excavators, are more common. If you’re looking for this type of used equipment, look for popular models from reputable brands. If possible, look for an older version of equipment that’s still made by the manufacturer today.
This is particularly important if you’re buying older equipment. You’re more likely to replace parts as your machines age. You have two potential sources for these parts:
- New OEM parts
- Used OEM parts, often sourced from other equipment
- Third party parts, which may not be designed to work with your equipment
For older equipment, you may need to rely on used parts sourced from other vehicles. It’s easier and less expensive to source used parts for popular models than it will be to source them for rare models.
If the manufacturer still makes the equipment in question, you may be able to source new parts as well as used. This gives you a wider range of choices. Some manufacturers, like Caterpillar, continue to provide parts for equipment models they no longer make. Cat Classic Parts provides a convenient way to find new parts for old models of construction equipment.
7. Purchase Equipment Through a Respected Dealer
You’ve inspected the equipment, checked its service record, and made sure that you can acquire replacement parts. Unfortunately, there’s one more area that can carry a big risk when you buy used equipment: the purchase process itself.
If possible, buy your equipment through a respected dealer. This will offer you the protection of a warranty, additional equipment inspections, and another look at important purchase documents. If you don’t have reputable dealer, ask friends and check business reviews.
If you’re purchasing directly from a private party, there are still a few things you can do to protect yourself.
First, get a mechanic to inspect the equipment thoroughly before you purchase it. Second, make sure that you have copies of any service logs or maintenance records. Finally, check the equipment title before completing the purchase. If the equipment hasn’t been fully paid off, there may be a lien on it from the bank or lender. Unless this lien is paid off, you’ll assume responsibility for it. In the past, unsuspecting buyers have had equipment seized for unpaid liens that stayed on the title.
WARNING SIGNS THAT USED EQUIPMENT WAS NOT WELL MAINTAINED
You may find yourself considering purchasing equipment that’s not in the best shape. Minor repairs are inevitable, but there are also red flags to watch for, including the following:
- Difficulty starting the engine
- Smoke near the engine when it starts
- Oil leaks on the equipment or underneath the equipment
- Coolant in the oil or vice versa
- High system temperatures, which can be early warnings of fluid contamination
- The appearance of foam in fluid reservoirs
- Visible welds on backhoe or bucket arms
- Signs of major structural damage to the equipment
- Loose pins or bushings in the undercarriage
It’s common to see signs of cosmetic damage or small dents in used construction equipment, but there’s a big difference between regular wear and tear and neglect or bad maintenance. Used equipment that’s been well maintained shouldn’t have major oil leaks, engine problems or fluid contamination.
MAINTAIN THE VALUE OF YOUR USED EQUIPMENT
If you plan to sell your equipment in the future, maintaining its value can pay off in big ways. Whether you buy new or used equipment, you can help maintain its value by:
1. Maintaining and Servicing Your Equipment Regularly
Preventative maintenance is key to keeping your equipment operating. Maintaining a regular maintenance schedule will reduce downtime and prevent unexpected major repairs. Preventative maintenance can also have a big impact on your equipment’s resale value.
Once you’ve purchased equipment, set up a maintenance schedule for it. Preventative services don’t have to be extensive. Regular fluid checks and replacing consumables like tires and filters regularly can go a long way. Make note of the manufacturer’s recommended services for key components, and schedule those services for equipment downtime.
2. Keeping Good Service Records
When it comes to selling used farm equipment, good service records are gold. Make sure you receive copies of any previous maintenance records when you purchase equipment.
Also, keep copies of planned and scheduled maintenance, major repairs and use hours. Doing so will increase the resale value of any equipment you sell. It can also make warranty claims easier and help you predict when you’ll need to order replacement parts to minimize downtime
3. Storing Your Equipment Indoors
Although it’s not strictly necessary to store equipment indoors, we recommend it. In the harsh winters of Iowa and Illinois, storing construction equipment indoors can considerably extend its lifespan. It can also increase the trade-in value of your equipment. For example, a tractor or dozer stored indoors often has a trade-in value 10-15 times higher than that of a tractor stored outdoors.
For more ideas on how to maintain the value of your equipment, read our guide on how to maintain your used equipment.
Altorfer is one of the nation’s leading distributors of construction and agricultural equipment. Our dealerships serve contractors and construction companies throughout Illinois, Iowa and Missouri. We got our start in the construction and agricultural industries. So we know firsthand how important the right equipment is for getting the job done. That’s why honest, integrity, and knowledge are the hallmarks of every sale we make.
If you’re looking for new or used construction equipment, contact Altorfer today.