Purchasing Equipment: When to Buy Used or New

As demand for your business continues to increase, you may find yourself seeking to purchase equipment to meet these growing needs. While some businesses have sufficient cash on hand to purchase equipment outright, many opt to secure financing. Besides selecting the right finance company, the most significant decision you’ll likely face is whether to invest in new or used equipment. In this article, we will examine the advantages and disadvantages of purchasing new versus used, and how to make the best decision for your expanding business.

While seemingly simple, it’s crucial to carefully consider both current and future costs associated with the equipment. New equipment typically requires a higher investment and depreciates more rapidly. Despite this, numerous companies favor new equipment for its reliability and generally longer lifespan. Opting for used equipment offers a lower cost but could potentially become more expensive if extensive maintenance is required. If the equipment is well maintained, you can greatly benefit from the lower initial cost. Buying used also means your equipment depreciates much slower than a new machine fresh off the lot.

Since most companies rely on financing to buy equipment, you may be wondering which is easier to finance: new or used? Generally, newer equipment is easier to finance at favorable rates because it is viewed as more reliable. Lenders often view new equipment as a safer investment due to its lower risk of breakdowns and higher resale value. In contrast, used is viewed as a “higher risk” and often comes with higher interest rates and shorter terms. Lenders are cautious about potential maintenance costs and may not finance older equipment. Although used equipment may incur higher interest rates, its monthly payments are often significantly lower. With these challenges in mind, financing used equipment can still be a smart move for your business if you are aiming to minimize your overall costs or need equipment for shorter-term projects

When deciding between financing new or used equipment for your growing business, it’s crucial to weigh both financial and practical considerations. New equipment promises reliability and lasting benefits, yet it requires a bigger overall investment and loses value faster. On the flip side, opting for used equipment can save money, but it might need more upkeep and could come with higher financing costs. Understanding your business’s unique needs, financial situation, and future plans is key. By calculating all expenses, like maintenance and potential resale value, you can make a choice that fits your business’s growth and daily operations, whether you prioritize immediate savings or long-term dependability.

Founded in 1998 and based in Bend, Oregon, AP Equipment Financing is a subsidiary of Tokyo Century (USA) Inc., the U.S. subsidiary of Tokyo Century Corporation. Tokyo Century Corporation, headquartered in Tokyo, has 7,800 employees, and offers specialty leasing and other high value-added financial services in more than 30 countries.

AP Equipment Financing is renowned for its reliability, consistently delivering innovative financial services and comprehensive expertise to ensure customer satisfaction. The affiliation with Tokyo Century Corporation grants AP the financial strength and resources of a large organization, while enabling them to uphold the swift and personalized service characteristic of an agile independent enterprise.